nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2022‒08‒29
sixteen papers chosen by
Joseph Marchand
University of Alberta

  1. Sweden's COVID-19 Recession: How Foreign and Domestic Infections Struck against Firms and Workers By Akerman, Anders; Ekholm, Karolina; Persson, Torsten; Nordström Skans, Oskar
  2. The Over-Education Wage Penalty among PhD Holders: A European Perspective By Rycx, Francois; Santosuosso, Giulia; Vermeylen, Guillaume
  3. The lock-in effect of marriage: Work incentives after saying, "Yes, I do." By Christl, Michael; De Poli, Silvia; Ivaškaitė-Tamošiūnė, Viginta
  4. The Effects of the Affordable Care Act on Labour Supply and Other Uses of Time By Bottasso, Anna; Cerruti, Gianluca; Conti, Maurizio; Stancanelli, Elena G. F.
  5. Are Shorter Cumulative Temporary Contracts Worse Stepping Stones? Evidence from a Quasi-Natural Experiment By Kabátek, Jan; Liang, Ying; Zheng, Kun
  6. Displaced or Depressed? The Effect of Working in Automatable Jobs on Mental Health By Blasco, Sylvie; Rochut, Julie; Rouland, Benedicte
  7. The gasoline price and the commuting behavior: Towards sustainable modes of transport By Belloc, Ignacio; Giménez-Nadal, José Ignacio; Molina, José Alberto
  8. Public wage and pension indexation in the euro area: an overview By Checherita-Westphal, Cristina; Domingues Semeano, João; Ahonen, Elena; Stinglhamber, Pierrick; Van Parys, Stefan; Clemens, Johannes; Urke, Katri; Soosaar, Orsolya; Vergou, Maria; Flevotomou, Maria; Staunton, David; Martínez-Pagés, Jorge; Avgousti, Aris; Zelionkaite, Gintare; Delobbe, Olivier; Henne, Florian; Brusbārde, Baiba; Farrugia, John; Attard, Juergen; Renzi, Fabrizio; Savegnago, Marco; Prammer, Doris; Reiss, Lukas; Eijsink, Gerard; Italianer, Jip; Campos, Maria Manuel; Kastelec, Andreja Strojan; Palášthyová, Barbora; Pisca, Vratislav; Kivistö, Jarkko
  9. Only the Fit Survive Recessions: Estimating Labor Market Penalties for the Obese Over the Business Cycle By Rachel Inafuku
  10. Information and Communication Technology, Hierarchy, and Job Design By Elisa Gerten; Michael Beckmann; Elisa Gerten; Matthias Kräkel
  11. Labour market dynamics and growth By Jake Bradley; Axel Gottfries
  12. Together Everyone Achieves More (TEAM): Incentives for Productivity By Anujit Chakraborty; Guidon Fenig
  13. Impact of the COVID-19 Crisis on India’s Rural Youth : Evidence from a Panel Survey and an Experiment By Chakravorty, Bhaskar; Bhatiya, Apurav Yash; Imbert, Clement; Lohnert, Maximilian; Panda, Poonam; Rathelot, Roland
  14. The Effect of Diesel Tax Rates on the Daily Commuting of US Workers: An Effective Instrument to Promote Sustainable Mobility? By Belloc, Ignacio; Gimenez-Nadal, J. Ignacio; Molina, José Alberto
  15. Productivity Trends in Japan - Reviewing Recent Facts and the Prospects for the Post-COVID-19 Era - By Tomoyuki Yagi; Kakuho Furukawa; Jouchi Nakajima
  16. The Effect of Minimum Wages on Consumer Bankruptcy By Diego Legal; Eric R. Young

  1. By: Akerman, Anders (Stockholm University); Ekholm, Karolina (Stockholm University); Persson, Torsten; Nordström Skans, Oskar (Uppsala University)
    Abstract: Using highly granular micro data, we document very divergent economic effects of the COVID-19 pandemic on Swedish private-sector firms and their workers. Firms that exported to, or imported from, heavily afflicted countries reduced their output due to disrupted trade. Service firms that operated in locations with many infections reduced their output due to falling local consumption, despite very limited regional restrictions. Workers at the bottom of each social gradient – defined by education, earnings or ethnicity – took a twofold hit: their employers faced the largest output drops and they experienced the largest transmissions from firm output to earnings.
    Keywords: COVID-19, virus transmission, inequality
    JEL: J23 J31
    Date: 2022–06
  2. By: Rycx, Francois (Free University of Brussels); Santosuosso, Giulia (Université Libre de Bruxelles); Vermeylen, Guillaume (University of Mons)
    Abstract: While the literature on the incidence and wage effects of over-education is substantial, specific results for doctoral graduates are surprisingly scarce. This article aims to fill this gap, not only by measuring the prevalence of over-educated PhD holders in Europe (i.e. in EU Member States and the UK), but also by estimating their wage penalty relative to what they could have earned in a job corresponding to their level of education. Using a unique pan-European dataset, we rely on two alternative measures of over-education and control stepwise for four groups of covariates (i.e. socio-demographic characteristics, skills needed for the job, other job-specific characteristics and motivations for employment) in order to interpret the over-education wage penalty in light of theoretical models. Depending on the specification adopted, we find that over-educated PhD holders face a wage penalty ranging from 25 to 13.5% with respect to their well-matched counterparts. Our results also show that the over-education wage penalty is significantly higher for PhD holders who are both over-educated and over-skilled and especially for those who are both over-educated and dissatisfied with their jobs. Finally, unconditional quantile regressions highlight that the over-education wage penalty among PhD holders increases greatly along the wage distribution.
    Keywords: PhD graduates, over-education, over-skilling, job satisfaction, wages, Europe
    JEL: J21 J24
    Date: 2022–07
  3. By: Christl, Michael; De Poli, Silvia; Ivaškaitė-Tamošiūnė, Viginta
    Abstract: In this paper, we use EUROMOD, the tax-benefit microsimulation model of the European Union, to investigate the impact of marriage-related tax-benefit instruments on the labour supply of married couples. For each married partner, we estimate their individual marginal effective tax rate and net replacement rate before and after marriage. We show that the marriage bonus, which is economically significant in eight European countries, decreases the work incentives for women and, particularly, on the intensive margin. In contrast, the incentives on the intensive margin increase for men once they are married, pointing to the marriage-biased and gender-biased taxbenefit structures in the analysed countries. Our results suggest that marriage bonuses contribute to a lock-in effect, where second earners, typically women, are incentivised to work less, with negative economic consequences.
    Keywords: marriage,cohabitation,marriage bonus,work incentives,gender,tax-benefit system,labour supply,Europe
    JEL: H31 J12 J22
    Date: 2022
  4. By: Bottasso, Anna (University of Genova); Cerruti, Gianluca (University of Genoa); Conti, Maurizio (University of Genova); Stancanelli, Elena G. F. (Paris School of Economics)
    Abstract: A vast literature studies the behavioural impacts of health care reforms, often coming to controversial conclusions. Here we examine the time allocation effects of the Affordable Care Act, also known as Obama Care, focusing on two ACA pillars: Medicaid expansion, which increased access to public health insurance, and the Tax Credit Premium, subsidizing the purchase of private health insurance. Using 2012-2015 daily diary data from the American Time Use Survey, we take a triple differences-in-differences approach, which exploits the cross-state variation in the timing of ACA implementation, together with differences in income eligibility thresholds, to identify the effects at stake. Considering a sample of childless adults, a group not eligible to public health insurance before ACA, we find that the Medicaid expansion reduced their labour supply by over an hour per day, increasing part-time work, while the Premium Tax Credit raised employment by about 7 percentage points. The implications for other uses of time are also studied.
    Keywords: Affordable Care Act, labor supply, time allocation
    JEL: I13 J08 J22
    Date: 2022–07
  5. By: Kabátek, Jan (University of Melbourne); Liang, Ying (Monash University); Zheng, Kun (Shandong University)
    Abstract: Temporary employment contracts are often regarded as 'stepping stones' for workers' careers, because they can help inexperienced workers secure a permanent contract. Our study evaluates whether this stepping-stone function is moderated by the contract duration, exploiting a Dutch policy reform that shortened the maximum duration of sequences of temporary contracts with the same employers from 3 years to 2 years. Leveraging a sharp regression discontinuity design and administrative register data, we show that the reform accelerated the transitions of temporary workers to permanent contracts with the same employers, with the effect being strongest among those working for the same employers for 1-2 years. We conclude that the reform brought more job security to temporary workers without impeding the stepping-stone function of their contracts.
    Keywords: temporary contracts, permanent contract, stepping stone, chain rule
    JEL: J28 J41 J42
    Date: 2022–06
  6. By: Blasco, Sylvie (GAINS, Université du Maine); Rochut, Julie; Rouland, Benedicte (University of Nantes)
    Abstract: Automation may destroy jobs and change the labour demand structure, thereby potentially impacting workers' health and well-being. Using French individual survey data, we estimate the effects of working in automatable jobs on mental health. Implementing propensity score matching to solve the issue of endogenous exposure to automation risk, we find that workers whose job is at risk of automation in the future are about 4 pp more likely to suffer at present from severe mental disorders. Fear of job loss within the year and fear of qualification or occupational changes seem relevant channels to explain our findings.
    Keywords: mental health, automation, job insecurity, propensity score matching
    JEL: I10 J24
    Date: 2022–07
  7. By: Belloc, Ignacio; Giménez-Nadal, José Ignacio; Molina, José Alberto
    Abstract: This paper analyzes how gasoline price is related to the time workers in the US spend commuting by private vehicle, public transport, walking, or cycling. Using data from the American Time Use Survey for the years 2003-2019, and collecting data on gasoline price by state and year, we find that higher gasoline prices are related to less commuting by private car, and more commuting by public transport, walking, and cycling, the latter being transportation alternatives that are more eco-friendly. A 1% increase in gas prices is associated with an increase of 0.325%, 0.568% and 0.129% in the commuting time by public and physical modes (walking and cycling), respectively. By contrast, a decrease of 0.638% is found in the proportion of commuting done by private car. Furthermore, the elasticity differs by urban characteristics, showing relatively larger values in urban areas for private and public modes. By analyzing the relationship between commuting time, and gasoline prices in the US, our results may serve to inform future policies aiming to develop a low-carbon transport system, especially in urban areas where workers may be more affected by gasoline prices (and thus taxation).
    Keywords: commuting time,gasoline price,commuting mode,urban areas,American Time Use Survey
    JEL: R40 J1 J22 D1 Q4 R4
    Date: 2022
  8. By: Checherita-Westphal, Cristina; Domingues Semeano, João; Ahonen, Elena; Stinglhamber, Pierrick; Van Parys, Stefan; Clemens, Johannes; Urke, Katri; Soosaar, Orsolya; Vergou, Maria; Flevotomou, Maria; Staunton, David; Martínez-Pagés, Jorge; Avgousti, Aris; Zelionkaite, Gintare; Delobbe, Olivier; Henne, Florian; Brusbārde, Baiba; Farrugia, John; Attard, Juergen; Renzi, Fabrizio; Savegnago, Marco; Prammer, Doris; Reiss, Lukas; Eijsink, Gerard; Italianer, Jip; Campos, Maria Manuel; Kastelec, Andreja Strojan; Palášthyová, Barbora; Pisca, Vratislav; Kivistö, Jarkko
    Abstract: If the responses of wages – both private and public – and of pensions to an increase in inflation lead to second-round effects, this can make an inflationary shock more persistent, especially in the presence of automatic wage and pension indexation. This occasional paper presents an overview of the indexation schemes and other mechanisms for setting public wages and pensions across the euro area countries. It concludes that price indexation of public wages is relatively limited in the euro area, while public pensions are overwhelmingly automatically indexed, either fully or partially, to prices and wages. JEL Classification: E62, J3, H55, E31
    Keywords: and Labor Costs, Compensation, Fiscal policy, Inflation, Social Security and Public Pensions, Wages
    Date: 2022–08
  9. By: Rachel Inafuku (University of Hawaii)
    Abstract: There is evidence of labor market discrimination against minority groups based on race, gender, beauty and other characteristics. Using two national surveys, I measure labor market differentials between obese and healthy weight workers over business cycle fluctuations. I find that during economic downturns, obese individuals experience larger declines in income relative to those who are not obese. These findings are robust to the inclusion of occupation fixed effects, suggesting the findings cannot be fully explained by obese workers selecting careers that tend to have greater sensitivity to business cycle fluctuations.
    JEL: J71 I14 E29
    Date: 2022–07
  10. By: Elisa Gerten (Faculty of Management, Economics and Social Sciences, University of Cologne, Albertus-Magnus-Platz, D-50923 Cologne, Germany); Michael Beckmann (Faculty of Business and Economics, University of Basel, Peter Merian-Weg 6, CH-4002 Basel, Switzerland; Institute for Employment Research (IAB), Nuremberg, Germany; IZA Institute of Labor Economics, Bonn,Germany;); Elisa Gerten (Faculty of Management, Economics and Social Sciences, University of Cologne, Albertus-Magnus-Platz, D-50923 Cologne, Germany); Matthias Kräkel (Department of Economics, University of Bonn, Adenauerallee 24-42, D-53113 Bonn, Germany; IZA Institute of Labor Economics, Bonn, Germany)
    Abstract: In recent decades, information and communication technology (ICT) has been associated with far-reaching changes in the design of jobs. However, it still remains unclear whether these changes will lead to more centralization or more decentralization in firms. Previous literature on this debate has focused on a strict dichotomy between the two possible directions. In contrast, our theoretical and empirical analyses show that equipping employees with ICT leads to both more centralized and more decentralized job-design policies. This finding is particularly pronounced for executive employees, who are granted more work autonomy but also experience more control via stronger monitoring, while non-executive employees only experience more monitoring without receiving more work autonomy. Our theoretical setting is based on a modified principal-agent model. In our empirical approach we apply estimation models that account for both endogeneity and essential heterogeneity, thereby exploiting exogenous geographic variation in our instrumental variable.
    Keywords: information and communication technology; centralization; decentralization; monitoring; working from home; marginal treatment effects; essential heterogeneity; instrumental variable
    JEL: D2 D86 J3 M1 M5
    Date: 2022–08
  11. By: Jake Bradley; Axel Gottfries
    Abstract: We embody a technological diffusion process into the canonical search and matching model of the labor market. New matches imitate the production process of incumbents. The resulting model retains the features of a labor search model whilst also generating endogenous growth through creative destruction. The model is calibrated to standard moments from the US labor market and generates, consistent with data, an order of magnitude more amplification in unemployment than a similarly calibrated model without endogenous growth. The model provides a natural framework to decompose the sources of growth based on labor market flows. Using cross-country data for 32 countries across a broad range of development, we find that growth via creative destruction is quantitatively more important for developing countries.
    Keywords: labour market dynamics; growth
    Date: 2022
  12. By: Anujit Chakraborty; Guidon Fenig (Department of Economics, University of California Davis)
    Abstract: What kind of incentives optimize a worker's motivation and performance, especially in remote work settings? We recruit online workers to work for up to 45 minutes on tedious tasks over three days. We randomly assign them to individualistic (Solo) or one of two team incentives. Under our Cooperative team incentive, workers equally share the team's earnings. Under our Competitive team incentive, the best performer gets an additional bonus proportional to the team's total productivity. We find that workers under the Cooperative team incentives are most likely to participate on all three days, exhaust all 45 minutes of work, and complete more tasks. Workers under Competitive team incentives also outperform the Solo workers, but the effect is insignificant. When workers can additionally observe their team member's effort from previous days (observability condition), they increase their own effort in response to their partner's high effort. This escalation effect is strongest under Competitive incentives, and under the observability condition, both team incentives outperform the individualistic incentive.
    JEL: C9 C72 C92 D9
    Date: 2022–08–15
  13. By: Chakravorty, Bhaskar (University of Warwick and GLO); Bhatiya, Apurav Yash (University of Birmingham and CAGE); Imbert, Clement (BREAD, CEPR, EUDN, JPAL and University of Warwick); Lohnert, Maximilian (JPAL SA); Panda, Poonam; Rathelot, Roland (CEPR and Institut Polytechnique de Paris)
    Abstract: This paper presents evidence on the short and long-term impact of the COVID-19 crisis on India’s rural youth. We interviewed about 2,000 vocational trainees from Bihar and Jharkhand three times after the first national lockdown in 2020, between June 2020 and December 2021. We find that a third of respondents who were in salaried jobs pre-lockdown lost their jobs, and half of those who worked out of state returned home shortly after the lockdown. We report a stark difference between men and women: while many male workers took up informal employment, most female workers dropped out of the labor force. In the second part of the paper, we use a randomised experiment to document the effects of a government-supported digital platform designed to provide jobs to low-skilled workers. The platform turned out to be difficult to use and publicised only a few job ads. We find no effect on job search intensity or employment. Our findings suggest that bridging the gap between rural young workers and urban formal labor markets requires more active and targeted policy interventions, especially for female workers Key words: Youth unemployment ; gender ; vocational training ; public policy JEL Codes: J2 ; J3 ; J6 ; J7 ; M5
    Date: 2022
  14. By: Belloc, Ignacio (University of Zaragoza); Gimenez-Nadal, J. Ignacio (University of Zaragoza); Molina, José Alberto (University of Zaragoza)
    Abstract: In this paper, we analyze whether diesel fuel taxes can be an effective tool to boost the daily commuting of US workers towards the use of green modes of transport. To that end, we use data from the American Time Use Survey 2003-2019 and explore the factors influencing commuting time and the proportion of commute using alternative modes of transport, including walking and cycling. Our results indicate that diesel fuel taxes are linked to a reduction in the total time devoted to commuting, and to the proportion of commuting by private car, and to an increase in the proportion of commuting done by green modes of transport such as public transport and walking. This relationship is not homogeneous in the urban dimension, as the effects on total commuting time and the percentage of commuting by public transport is present in urban areas only. In a context where many countries are implementing policies aimed at increasing the use of sustainable modes of personal mobility, our results indicate that taxing fuels used for personal mobility may be an efficient way to decrease the use of more polluting modes of transport and encourage more eco-friendly alternatives while commuting.
    Keywords: commuting time, green mobility, state diesel taxes, American Time Use Survey
    JEL: D1 Q4 R4
    Date: 2022–07
  15. By: Tomoyuki Yagi (Bank of Japan); Kakuho Furukawa (Bank of Japan); Jouchi Nakajima (Bank of Japan)
    Abstract: Labor productivity is the source of economic growth. This paper shows that the growth rate of labor productivity in Japan has remained low since the collapse of the bubble economy in the early 1990s. We summarize the background and the issues involved in improving productivity based on previous research and additional analyses provided in this paper. We also analyze developments in labor productivity during the novel coronavirus infection (COVID-19) pandemic and discuss the issues involved in achieving sustainable growth in the post-COVID-19 era. Based on our literature review, the background to the recent stagnation in labor productivity can be summarized as follows. First, the pace of capital accumulation has generally slowed. Second, there are issues involved with the utilization of capital stock. While investment in research and development (R&D) has been increasing, it has not led to improvements in productivity. Third, Japan has issues with resource reallocation. By analyzing data on individual firms, we find that production resources are not being allocated efficiently as low-productivity firms remain in the market for a long time. These long-standing issues which Japan has faced became apparent once again under the pandemic. Specifically, the pace of capital accumulation is further reduced, and the efficiency of resource allocation has not improved. Meanwhile, increased utilization of IT capital, such as the expansion of working from home and online consumption, is a progress in improving productivity; however, such progress has been limited in comparison to that of other countries. To improve its labor productivity and attain sustainable economic growth in the future, it will be needed for Japan to further accelerate such progress and steadily resolve the various issues which it faces.
    Keywords: Productivity; Intangible assets; Efficiency of utilization; Reallocation; COVID-19 pandemic
    JEL: E20 E22 J24 O47
    Date: 2022–07–28
  16. By: Diego Legal; Eric R. Young
    Abstract: We use cross-state differences in minimum wage (MW) levels and county-level consumer bankruptcy rates from 1991-2017 to estimate the effect of changes in minimum wages on consumer bankruptcy by exploiting policy discontinuities at state borders. We find that Chapter 7 bankruptcy rates are significantly lower in counties belonging to states with higher MW compared to neighboring counties in the lower MW state: a 10 percent increase in MW decreases the bankruptcy rate by around 4 percent. Before the 2005 bankruptcy reform, this effect was almost twice as large as for the entire sample. Theoretically, we cannot sign the effect of MW on bankruptcy and credit utilization; we use a stylized consumption/saving model with default to illustrate the dependence on particular parameters and to provide intuition on how to interpret our results.
    Keywords: Consumer bankruptcy; unsecured credit; minimum wage
    JEL: K35 J30 J38 E24 E44
    Date: 2022–08–09

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