nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2022‒05‒23
twenty papers chosen by
Joseph Marchand
University of Alberta

  1. Industries, Mega Firms, and Increasing Inequality By John C. Haltiwanger; Henry R. Hyatt; James Spletzer
  2. A Year Older, A Year Wiser (and Farther from Frontier): Invention Rents and Human Capital Depreciation By Philippe Aghion; Ufuk Akcigit; Ari Hyytinen; Otto Toivanen
  3. Do Temporary Help Agencies Help? Temporary employment transitions for low-skilled workers By Carrasco, Raquel; Gálvez Iniesta, Ismael; Jerez, Belén
  4. Employer Attitudes and the Hiring of Immigrants and International Students: Evidence from a Survey of Employers in Canada By Fang, Tony; Xiao, Na; Zhu, Jane; Hartley, John
  5. A Partial Identification Approach to Identifying the Determinants of Human Capital Accumulation: An Application to Teachers By Nirav Mehta
  6. "Does geographical exposure to language learning centres matter in a bilingual city?". By Antonio Di Paolo; Bernat Mallén
  7. City Minimum Wages and Spatial Equilibrium Effects By Jorge Pérez Pérez
  8. An Evaluation of the Paycheck Protection Program Using Administrative Payroll Microdata By David Autor; David Cho; Leland D. Crane; Mita Goldar; Byron Lutz; Joshua K. Montes; William B. Peterman; David D. Ratner; Daniel Villar Vallenas; Ahu Yildirmaz
  9. Understanding the Economic Impact of COVID-19 on Women By Claudia Goldin
  10. The Distribution of the Gender Wage Gap : An Equilibrium Model By Bhalotra, Sonia R.; Fernandez, Manuel; Wang, Fan
  11. Long-Run Impacts of In-Utero Ramadan Exposure: Evidence from Administrative Tax Records By Timotej Cejka; Mazhar Waseem
  12. Wages, labour market, and living standards in China, 1530-1840 By Liu, Ziang
  13. Working from home during a pandemic – a discrete choice experiment in Poland By Piotr Lewandowski; Katarzyna Lipowska; Mateusz Smoter
  14. JAQ of All Trades: Job Mismatch, Firm Productivity and Managerial Quality By Luca Coraggio; Marco Pagano; Annalisa Scognamiglio; Joacim Tåg
  15. Patterns of Time Use among Older People By Ferranna, Maddalena; Sevilla, J.P.; Zucker, Leo; Bloom, David E.
  16. Fertility and Family Labor Supply By Katrine M. Jakobsen; Thomas H. Jørgensen; Hamish Low
  17. Intergenerational Transmission of Time Preferences: An Evidence from Rural Thailand By Suparee Boonmanunt; Wasinee Jantorn; Varunee Khruapradit; Weerachart Kilenthong
  18. The Real Effects of Banking the Poor: Evidence from Brazil By Julia Fonseca; Adrien Matray
  19. Worker well-being and quit intentions: is measuring job satisfaction enough? By Diane Pelly
  20. The allocation of incentives in multi-layered organizations By Erika Deserranno; Stefano Caria; Philipp Kastrau; Gianmarco León-Ciliotta

  1. By: John C. Haltiwanger; Henry R. Hyatt; James Spletzer
    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.
    JEL: J21 J31
    Date: 2022–04
  2. By: Philippe Aghion; Ufuk Akcigit; Ari Hyytinen; Otto Toivanen
    Abstract: We look at how the arrival of an invention affects wage returns and probability of moving out of employment for white- and blue-collar coworkers of the inventor. First results suggest that older workers are hurt by the arrival of an invention. This negative effect disappears when we control for education and, in particular, for time that since obtaining the last formal degree, i.e., distance to human capital frontier. If anything, this effect is slightly higher for non-STEM than STEM-educated co-workers. This result suggests that retraining programs could be helpful in making the process of creative destruction and economic growth more inclusive.
    JEL: I24 J24 O31
    Date: 2022–03
  3. By: Carrasco, Raquel; Gálvez Iniesta, Ismael; Jerez, Belén
    Abstract: We investigate how being employed by a Temporary Help Agency (THA) affects transition rates to alternative labor market states for low-skilled workers. Our approach is based on the estimation of competing risk discrete duration models, and reveals the importance of accounting for short duration dependence. We use Spanish administrative data for the period 2005-2017. We find that having a THA contract rather than a direct-hire temporary contract increases the probability of entering into unemployment or another agency job at all durations. Agency workers are more likely to transition to permanent employment than their direct-hire counterparts, but these transitions are very infrequent for both. The positive effect of THA employment on the probability of transitioning to a permanent job is procyclical. By contrast, the positive effect on the probability of entering unemployment (or another agency job) increased during the Great Recession relative to the previous economic expansion, and has remained high during the recovery. In words, agency jobs in Spain are characterized by higher unemployment risk and persistence than regular temporary jobs, and these differences have intensified in recent years. Accouting for unobserved heterogeneity does not alter our main results.
    Keywords: Temporary Help Agency; Temporary Employment; Competing Risk Duration Models; Unobserved Heterogeneity
    JEL: J2 J4 J24 J62 C34
    Date: 2022–05–10
  4. By: Fang, Tony (Memorial University of Newfoundland); Xiao, Na (Laurentian University); Zhu, Jane (Memorial University of Newfoundland); Hartley, John (Memorial University of Newfoundland)
    Abstract: What are the perceptions of employers towards hiring immigrants and international students in Atlantic Canada? How are they related to hiring outcomes? Our analysis based on a 2019 random, representative survey of 801 employers finds that those employers who report beliefs that multiculturalism is creativity-enhancing in the workplace and that immigrants are harder working than local workers are more likely to report hiring or intending to hire newcomers and international students Although most employers report positive attitudes towards newcomers and international students, employers who report perceptions that immigrants tend to take jobs from domestic workers, accept lower pay, have a lower retention probability, face language barriers, have higher training costs, and hold unreliable credentials are less likely to report hiring from this group.
    Keywords: immigrants, international students, labour and skill shortages, employer hiring attitudes, employer survey, Atlantic Canada
    JEL: J23 J61 J63 J68
    Date: 2022–04
  5. By: Nirav Mehta
    Abstract: This paper views teacher quality through the human capital perspective. Teacher quality exhibits substantial growth over teachers’ careers, but why it improves is not well understood. I use a human capital production function nesting On-the-Job-Training (OJT) and Learning-by-Doing (LBD) and experimental variation from Glewwe et al. (2010), a teacher incentive pay experiment in Kenya, to discern the presence and relative importance of these forces. The identified set for the OJT and LBD components has a closed-form solution, which depends on experimentally estimated average treatment effects. The results provide evidence of an LBD component, as well as an informative upper bound on the OJT component.
    Keywords: human capital, teacher quality, on-the-job training, learning-by-doing, partial identification
    JEL: I20 I28 J20 J24 J45 C10
    Date: 2022
  6. By: Antonio Di Paolo (AQR-IREA, Department of Econometrics, Statistics and Applied Economics Faculty of Economics & Business, University of Barcelona, Campus Diagonal, Torre 4, Avinguda Diagonal 690, 08034 Barcelona (Spain).); 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
  7. By: Jorge Pérez Pérez
    Abstract: This paper studies the effect of minimum wage changes on spatial equilibriums in local labor markets. Using data for the U.S. and minimum wage variation across state borders, I analyze how commuting, residence, and employment locations change in response to local minimum wage changes. I find that areas where the minimum wage increases receive fewer low-wage commuters. I formulate a spatial equilibrium model and calculate counterfactuals with a higher minimum wage for U.S. cities considering an increase. For small minimum wage increases, most counties would receive higher low-wage commuting and have fewer low-wage residents. As minimum wage increases are larger, there are higher low-wage commuting reductions driven by employment relocation.
    JEL: J31 J38 R23
    Date: 2022–03
  8. By: David Autor; David Cho; Leland D. Crane; Mita Goldar; Byron Lutz; Joshua K. Montes; William B. Peterman; David D. Ratner; Daniel Villar Vallenas; Ahu Yildirmaz
    Abstract: The Paycheck Protection Program (PPP), a principal element of the fiscal stimulus enacted by Congress during the COVID-19 pandemic, aimed to assist small businesses to maintain employment and wages during the crisis. We use high-frequency administrative payroll data from ADP--one of the world’s largest payroll processing firms--to estimate the causal effect of the PPP on the evolution of employment at PPP-eligible firms relative to PPP-ineligible firms, where eligibility is determined by industry-specific firm-size cutoffs. We estimate that the PPP boosted employment at eligible firms by between 2 percent to 5 percent at its peak in mid-2020, with this effect waning to 0 to 3 percent throughout the remainder of the year. Employers retained an estimated additional 3.6 million jobs due to the PPP as of mid-May 2020, and 1.4 million jobs at the end of 2020. The implied cost per year of employment retained was $169,000 to $258,000, equal to 3.4 to 5.2 times median earnings.
    JEL: E24 H25 H32 H81 J38
    Date: 2022–04
  9. By: Claudia Goldin
    Abstract: The impact of the pandemic on the employment, labor supply, and caregiving of women is assessed. Compared with previous recessions, that induced by COVID-19 impacted women’s employment and labor force participation more relative to men. But the big divide was less between men and women than it was between the more- and the less-educated. Contrary to many accounts, women did not exit the labor force in large numbers, and they did not greatly decrease their hours of work. The aggregate female labor force participation rate did not plummet. The ability to balance caregiving and work differed greatly by education, occupation, and race. The more educated could work from home. Those who began the period employed in various in-person “service” occupations and establishments experienced large reductions in employment. Black women were more negatively impacted beyond other factors considered and the health impact of COVID-19 is a probable reason. The estimation of the pandemic’s impact depends on the counterfactual used. The real story of women during the pandemic concerns the fact that employed women who were educating their children, and working adult daughters who were caring for their parents, were stressed because they were in the labor force, not because they left.
    JEL: J0 J20 J21 J22
    Date: 2022–04
  10. By: Bhalotra, Sonia R. (University of Warwick); Fernandez, Manuel (Universidad de los Andes); Wang, Fan (University of Houston)
    Abstract: We develop an equilibrium model of the labor market to investigate the joint evolution of gender gaps in labor force participation and wages. We do this overall and by task-based occupation and skill, which allows us to study distributional effects. We structurally estimate the model using data from Mexico over a period during which women's participation increased by fty percent. We provide new evidence that male and female labor are closer substitutes in high-paying analytical task-intensive occupations than in lower-paying manual and routine task-intensive occupations. We find that demand trends favored women, especially college-educated women. Consistent with these results, we see a widening of the gender wage gap at the lower end of the distribution, alongside a narrowing at the top. On the supply side, we find that increased appliance availability was the key driver of increases in the participation of unskilled women, and fertility decline a key driver for skilled women. The growth of appliances acted to widen the gender wage gap and the decline of fertility to narrow it. We also trace equilibrium impacts of growth in college attainment, which was more rapid among women, and of emigration, which was dominated by unskilled men. Our counterfactual estimates demonstrate that ignoring the countervailing effects of equilibrium wage adjustments on labor supplies, as is commonly done in the literature, can be misleading. JEL classifications: J16, J21, J24, J31, O33
    Keywords: Female labor force participation ; gender wage gap ; technological change ; supply-demand framework ; task-based approach ; wage distribution ; wage inequality
    Date: 2022
  11. By: Timotej Cejka; Mazhar Waseem
    Abstract: Using Ramadan fasting as a natural experiment, we estimate the long-run impacts of in-utero health and nutrition shocks on adult outcomes. We exploit administrative tax return data comprising the universe of income tax returns filed in Pakistan during 2007–2009. The data allow us to link in-utero Ramadan exposure of individuals with their later life labor market outcomes. We find a robust negative effect of Ramadan exposure on earnings (a lower-bound estimate of around 2–3 percent). The exposed individuals are less likely to be in high-skilled occupations and less likely to be in the top of the income distribution. Using nationally representative survey data we show that our results are unlikely to be driven by selective timing of conception.
    Keywords: nutrition shock, human capital, labor market outcomes
    JEL: I15 J13 J24
    Date: 2022
  12. By: Liu, Ziang
    Abstract: Historical wages continue to provide new insights into the long-term development of the economy. In early modern Europe, the standard wage narrative hypothesises a “little divergence” in which England and the Low Countries outperformed other economies between 1500 and 1750. However, our knowledge of Chinese wage history remains considerably limited when it comes to the “great divergence” debate between China and leading economies in Europe. This article contributes to building a wage series in Lower Yangzi China from the sixteenth to the nineteenth centuries. It shows that despite the continued increase of nominal wages over this period, real day wages witnessed a sharp decline between 1620 and 1640, followed by a substantial improvement after1650, until a quick decline between 1740 and 1760. A wage gap between the Lower Yangzi and London may open up in the early eighteenth century, but this implication still awaits further examination considering the measurement limits in the current approach.
    Keywords: wage; living standard; labour market; early modern China; great divergence
    JEL: N30 N15 J21 J31
    Date: 2022–05
  13. By: Piotr Lewandowski; Katarzyna Lipowska; Mateusz Smoter
    Abstract: The COVID-19 pandemic has transformed working from home from a rarity to a widely adopted job amenity. We study workers’ willingness to pay for working from home, and how it may be affected by subjective and objective assessments of COVID-19-related risks. We conducted a discrete choice experiment with more than 10,000 workers in Poland. We randomised wage differences between otherwise identical home- and office-based jobs. We also randomised an information provision treatment in which we informed 50% of workers about the level of exposure to contagion in their occupation, and how it may be reduced by working from home. We found that the demand for working from home was substantial – the majority of participants would prefer to work from home if they were offered the same wage for a home-based job as they would earn in an office-based job. On average, workers would sacrifice 5.1% of their earnings for the option to work from home, especially for 2-3 days a week (7.3%) rather than 5 days a week (2.8%). We also found that the perception of COVID-19 mattered, as workers who perceived it as a threat were willing to give up a much higher share of their earnings than those who did not. However, the willingness to pay did not differ significantly between individuals depending on whether their occupation had a high or a low level of exposure, or between individuals treated in the information experiment and those in the control group.
    Keywords: labour market, homeoffice, pandemic, others
    JEL: J21 J44
    Date: 2022–04
  14. By: Luca Coraggio (University of Naples Federico II); Marco Pagano (University of Naples Federico II and EIEF); Annalisa Scognamiglio (University of Naples Federico II); Joacim Tåg (Research Institute of Industrial Economics (IFN))
    Abstract: Does the matching between workers and jobs help explain productivity differentials across firms? To address this question we develop a job-worker allocation quality measure (JAQ) by combining employer-employee administrative data with machine learning techniques. The proposed measure is positively and significantly associated with labor earnings over workers’ careers. At firm level, it features a robust positive correlation with firm productivity, and with managerial turnover leading to an improvement in the quality and experience of management. JAQ can be constructed for any employer-employee data including workers’ occupations, and used to explore the effect of corporate restructuring on workers’ allocation and careers.
    Date: 2022
  15. By: Ferranna, Maddalena (Harvard School of Public Health); Sevilla, J.P. (Harvard School of Public Health); Zucker, Leo (Harvard School of Public Health); Bloom, David E. (Harvard University)
    Abstract: We analyze time use studies to describe how people allocate their time as they age, especially among paid work, unpaid work, leisure, and personal care. We emphasize differences in time allocation between older (i.e., those aged 65+) and younger people; between developed and developing countries; and by other demographic characteristics such as gender, marital status, health status, and educational attainment. We summarize related economic literature and crystallize a framework for thinking about key conceptual issues involving time allocation over the life cycle. We conclude by assessing the adequacy of global data resources in this area and by discussing some promising opportunities to fill salient gaps in the literature.
    Keywords: time use, aging, demographics, paid work, unpaid work, leisure, personal care
    JEL: D13 D15 J14 J22
    Date: 2022–04
  16. By: Katrine M. Jakobsen (Department of Economics, University of Oxford); Thomas H. Jørgensen (CEBI, Department of Economics, University of Copenhagen); Hamish Low (Department of Economics, University of Oxford and IFS)
    Abstract: We study the role of fertility adjustments for the labor market responsiveness of men and women. First, we use longitudinal Danish register data and tax reforms from 2009 to provide new empirical evidence on asymmetric fertility adjustments to tax changes of men and women. Second, we quantify the importance of these fertility adjustments for understanding the labor supply responsiveness of couples through a life-cycle model of family labor supply and fertility. Allowing fertility adjustments increases the labor supply responsiveness of women by 28%. These adjustments affect human capital accumulation and has permanent implications for the gender wage gap within couples.
    Keywords: Fertility, Labor supply, Human capital accumulation, Gender inequality, Tax reform, Life-Cycle
    JEL: J22 J13 D15 H24
    Date: 2022–05–18
  17. By: Suparee Boonmanunt; Wasinee Jantorn; Varunee Khruapradit; Weerachart Kilenthong
    Abstract: This study investigates the association between child and caregiver time preferences in rural Thailand. We find that caregiver discount factor is positively correlated to a child’s ability to delay gratification, indicating that patient children are more likely to have patient caregivers. This correlation exists regardless of whether the caregiver is a biological parent or not. However, some evidence suggests genetic contribution in intergenerational transmission of time preferences: this correlation is stronger when both biological parents live at home than when none is present, and mother’s time preferences is stronger correlated with child time preferences than grandmother’s.
    Keywords: Time preferences; Field experiment; Intergenerational transmission; Skill formation; Genetics
    JEL: C93 D64 J24 O15
    Date: 2022–05
  18. By: Julia Fonseca (University of Illinois at Urbana-Champaign); Adrien Matray (Princeton University)
    Abstract: We study how financial development affects economic development and wage inequality. We use a large expansion of government-owned banks into Brazilian cities with low bank branch coverage and combine it with data on the universe of employees from 2000–2014. We find that higher financial development fosters firm growth, higher labor demand, and higher average wages, especially for cities initially in banking deserts. However, these gains are not shared equally. Instead, they increase with workers’ productivity, implying a substantial increase in wage inequality. The changes to inequality are concentrated in cities where the initial supply of skilled workers is low, indicating that talent scarcity can drive how financial development affects inequality. Our results are inconsistent with alternative explanations such as differential exposure to Brazil’s economic boom, an overall increase in government lending, and other government or social welfare programs. These results motivate embedding skill heterogeneity into macro-finance development models in order to capture these distributional consequences.
    Keywords: Banking, Economic Development, Financial Development, Wage Inequality
    JEL: O10
    Date: 2022–03
  19. By: Diane Pelly (UCD School of Economics & UCD Geary Institute for Public Policy, University College Dublin)
    Abstract: While the links between worker well-being and quit intentions have been well researched, most studies to date rely on a very narrow conceptualisation of well-being, namely job satisfaction, thus ignoring the documented multidimensionality of subjective well-being. This paper explores whether this approach is justified. Using novel survey data, I compare the extent to which hedonic (job satisfaction and affect) and eudemonic (disengagement and basic psychological needs) well-being indicators individually and jointly explain variation in the quit intentions of 994 full-time UK workers. Well-being indicators perform well, explaining four to nine times more variation in quit intentions than wages and hours combined, with the disengagement measure performing best. I find systematic differences in the hedonic and eudemonic well-being profiles of workers who report positive quit intentions and those who do not. A composite model containing all seven well-being indicators offers the best fit, explaining 29.4% of variation in quit intentions versus 24.0% for job satisfaction on its own. My findings suggest that the standard single-item job satisfaction indicator is probably good enough for organisations who are looking for a quick and easy way to identify workers who may be most at risk of forming positive quit intentions. For organisations seeking to develop effective preventative quit strategies however, supplementing single-item job satisfaction with multifaceted well-being indicators is likely to yield valuable additional insights.
    Keywords: voluntary turnover; quit intentions; employee retention; worker well-being; experienced utility; decision utility; job satisfaction; engagement; affect
    JEL: I31 J28 J22 J26 M5
    Date: 2022–05–17
  20. By: Erika Deserranno; Stefano Caria; Philipp Kastrau; Gianmarco León-Ciliotta
    Abstract: A classic problem faced by organizations is to decide how to distribute incentives among their different layers. By means of a field experiment with a large public-health organization in Sierra Leone, we show that financial incentives maximize output when they are equally shared between frontline health workers and their supervisor. The impact of this intervention on completed health visits is 61% larger than the impact of incentive schemes that target exclusively the worker or the supervisor. Also, the shared incentives uniquely improve overall health-service provision and health outcomes. We use these experimental results to structurally estimate a model of service provision and find that shared incentives are effective because worker and supervisor effort are strong strategic complements, and because side payments across layers are limited. Through the use of counterfactual model experiments, we highlight the importance of effort complementarities across the different layers of an organization for optimal policy design.
    Keywords: Incentives, multi-layered organizations, effort complementarities, side payments, output
    JEL: O15 O55 I15 J31 M52
    Date: 2022–04

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.