nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2022‒09‒12
twenty-one papers chosen by
Joseph Marchand
University of Alberta

  1. Temporary contracts: an analysis of the North-South gap in Italy By Silvia Camussi; Fabrizio Colonna; Francesca Modena
  2. The Race Between Education, Technology, and Institutions By Jonathan Vogel
  3. New Perspectives on Inequality in Latin America By Fernández, Manuel; Serrano, Gabriela
  4. The Returns to College Major Choice: Average and Distributional Effects, Career Trajectories, and Earnings Variability By Rodney J. Andrews; Scott A. Imberman; Michael F. Lovenheim; Kevin M. Stange
  5. Independent Contracting, Self-Employment, and Gig Work: Evidence from California Tax Data By Annette Bernhardt; Christopher Campos; Allen Prohofsky; Aparna Ramesh; Jesse Rothstein
  6. Bringing Them In or Pushing Them Out? The Labor Market Effects of Pro-cyclical Unemployment Assistance Changes By Gerard Domènech-Arumí; Silvia Vannutelli
  7. Performance Pay and Work Hours: US Survey Evidence By Artz, Benjamin; Heywood, John S.
  8. The Over-education Wage Penalty Among PhD Holders: A European Perspective By François Rycx; Giulia Santosuosso; Guillaume Vermeylen
  9. Role of Artificial Intelligence in Intra-Sectoral Wage Inequality in an Open Economy: A Finite Change Approach By Shreya Roy; Sugata Marjit; Bibek Ray Chaudhuri
  10. Estimation of Heterogeneous Treatment Effects Using Quantile Regression with Interactive Fixed Effects By Ruofan Xu; Jiti Gao; Tatsushi Oka; Yoon-Jae Whang
  11. College openings and local economic development By Berlingieri, Francesco; Gathmann, Christina; Quinckhardt, Matthias
  12. Green Energy Jobs in the US: What Are They, and Where Are They? By E. Mark Curtis; Ioana Marinescu
  13. Heterogeneous effects of the Covid-19 crisis on Italian workers’ incomes: the role played by jobs routinization and teleworkability By Giovanni Gallo; Silvia Granato; michele Raitano
  14. Pitfalls of pay transparency: Evidence from the lab and the field By Katharina Brütt; Huaiping Yuan
  15. Time Pressure Preferences By Thomas Buser; Roel van Veldhuizen; Yang Zhong
  16. Media coverage and pandemic behaviour: Evidence from Sweden By Zhuang, Maiting; Garz , Marcel
  17. Team composition and productivity: evidence from nursing teams in the English National Health Service By Kelly, E.;; Propper, C.;; Zaranko, B.;
  18. Occupation-personality fit is associated with higher employee engagement and happiness By McCarthy, Paul X.; Kern, Margaret L.; Gong, Xian; Parker, Michael; Rizoiu, Marian-Andrei
  19. Expectations in Education: Framework, Elicitation, and Evidence By Pamela Giustinelli
  20. Understanding the Spatial Relationship Between the Informal Labor Market and Violent Crime in Cali, Colombia By Magaly Faride Herrera Giraldo; Carlos Giovanni González Espitia
  21. The Next Wave of Energy Innovation: Which Technologies? Which Skills? By David Popp; Francesco Vona; Myriam Grégoire-Zawilski; Giovanni Marin

  1. By: Silvia Camussi (Bank of Italy); Fabrizio Colonna (Bank of Italy); Francesca Modena (Bank of Italy)
    Abstract: In Italy the incidence of temporary employment significantly varies across areas, being on average significantly higher in southern regions. Using a unique source of administrative data we show that the gap doesn't accrue from differences in firms' hiring strategies: as a matter of fact workers are initially hired on a temporary basis more often in the North. The largest share of fixed-term contracts in the South reflects instead (i) the lower probability that they are eventually converted into an open-ended one and (ii) the lower duration of permanent positions.
    Keywords: temporary contracts, contract duration, transformation rate, Italy
    JEL: J23 J24 J31 O33
    Date: 2022–07
  2. By: Jonathan Vogel
    Abstract: I generalize the canonical model--in which relative supply and demand for worker skills shape the skill premium--incorporating monopsony power, minimum wages, and unemployment. I estimate the extended canonical model using national data and, separately, state-level data. I show that incorporating the minimum wage improves the out-of-sample fit of the traditional canonical model. I document that minimum wages--together with supply and demand--play a central role in shaping the evolution of the U.S. college premium and the differential evolution of state-level college premia. Lending credibility to these conclusions, the state and national estimates are not only qualitatively, but also quantitatively consistent.
    JEL: E24 J0 J23 J31 J42
    Date: 2022–07
  3. By: Fernández, Manuel (Universidad de los Andes); Serrano, Gabriela (Universidad de los Andes)
    Abstract: Latin American countries have some of the highest levels of income inequality in the world. However, earnings inequality significantly changed over the last three decades, increasing during the 1980s and 1990s, declining sharply in the 2000s, and stagnating or even increasing in some countries during the last decade. Macroeconomic instability in the region in the 1980s and early 1990s, and the introduction of structural reforms like trade, capital, and financial liberalization, affected the patterns of relative demand and relative earnings across skill-demographic groups in the 1990s, increasing inequality. Significant gains in educational attainment, the demographic transition, and rising female labor force participation changed the skill-demographic composition of labor supply, pushing education and experience premium downward, but this was not enough to counteract demand-side trends. At the turn of the century, improved external conditions, driven by China's massive increase in demand for commodities boosted economies across Latin America, which began to grow rapidly. Growth was accompanied by a positive shift in the relative demand for less-educated workers, stronger labor institutions, rising minimum wages, and declining labor informality, a confluence of factors that reduced earnings inequality. In the aftermath of the global financial crisis, particularly after the end of the commodities price boom in 2014, economic growth decelerated, and the pace of inequality decline stagnated. There is extensive literature trying to explain the causes of earnings inequality dynamics during the last three decades in Latin America. We discuss this literature regarding themes, methodological approaches, and key findings, emphasizing the latest perspectives. The focus is on earnings inequality and how developments in labor markets have shaped it.
    Keywords: inequality, Latin America, education premium, experience premium, trade reforms, minimum wage, informality
    JEL: D31 D33 F16 J21 J23 J31 O54
    Date: 2022–07
  4. By: Rodney J. Andrews; Scott A. Imberman; Michael F. Lovenheim; Kevin M. Stange
    Abstract: There is a growing body of research examining the labor market returns to college major, motivated by the large returns to skill in the labor market. Prior research has focused almost exclusively on mean effects and has paid little attention to the role of earnings growth and variability. Using linked administrative data from Texas on public K-12 students followed through college into the labor market, we find that the focus on mean differences mask four important features of the returns to college majors. First, majors are associated with varying earnings growth, which makes the returns sensitive to the experience distribution of the sample analyzed. Second, average earnings effects vary across workers; quantile treatment effect estimates show that mean effects mask considerable effect heterogeneity. Third, major choice affects earnings variability within workers over time. College major effects on earnings and variability are negatively correlated; high return majors also have more stable earnings. Finally, there is substantial variation in returns across specific majors within aggregate major groups and across institutions. This variation suggests that estimate of returns to college major are sensitive to how majors are aggregated and the composition of institutions in the sample.
    JEL: I23 I26 J30
    Date: 2022–08
  5. By: Annette Bernhardt; Christopher Campos; Allen Prohofsky; Aparna Ramesh; Jesse Rothstein
    Abstract: We use de-identified data from California personal income tax returns to measure the frequency and nature of independent contracting and self-employment work in California. We identify this work by the presence of a Schedule C on the tax return and/or the receipt of a Form 1099 information return. We estimate that 14.4% of California workers aged 18-64 in tax year 2016 had some independent contracting or self-employment income; about half of these workers also had earnings from traditional W-2 jobs during the year. We find that only a small share (1.4%) of workers had earnings from online labor platforms (often called gig work). Workers with low earnings were significantly more likely to earn independent contracting or self-employment income and to rely primarily or exclusively on that income. We explore the characteristics of workers engaging in independent contracting and self-employment and their distribution across family type, geography, and industry.
    JEL: J24 J4 J46
    Date: 2022–08
  6. By: Gerard Domènech-Arumí; Silvia Vannutelli
    Abstract: We exploit an unanticipated labor market reform in 2012 Spain to estimate the effects of pro-cyclical changes in long-term unemployment assistance (UA). The reform raised the minimum age to receive unlimited-duration UA from 52 to 55. Using a difference-in-differences design, we document that shorter benefits caused (i) shorter non-employment duration, especially among younger workers; (ii) higher labor force exit and other programs' take-up, especially among older workers; (iii) lower re-employment wages. The reform induced moderate government savings. Our results highlight how considering the interplay with labor market conditions is crucial when designing long-term benefit schedules affecting workers close to retirement.
    JEL: J31 J64 J65
    Date: 2022–07
  7. By: Artz, Benjamin (University of Wisconsin, Oshkosh); Heywood, John S. (University of Wisconsin, Milwaukee)
    Abstract: We examine the hypothesis that performance pay increases work hours. If performance pay incentivizes greater hours, this could cause the demonstrated link between performance pay and poorer worker health. Using US survey data, we confirm greater work hours and an increased likelihood of long working hours for performance pay workers. This remains in worker fixed effect estimates and in worker with employer fixed effect estimates. The magnitudes remain sufficiently large to support the potential role of long hours as an intermediary between performance pay and reduced worker health. Despite managers being the most likely to both receive performance pay and work long hours, we show this association largely reflects sorting and not the behavioral response evident for other workers.
    Keywords: performance related pay, hours worked
    JEL: J22 J33
    Date: 2022–07
  8. By: François Rycx (Université libre de Bruxelles (CEBRIG and DULBEA), GLO, IRES, IZA, Soci&ter); Giulia Santosuosso (Université libre de Bruxelles and E.CA Economics); Guillaume Vermeylen (Université de Mons, Soci&ter, DULBEA and CEBRIG)
    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: 2022–07–05
  9. By: Shreya Roy; Sugata Marjit; Bibek Ray Chaudhuri
    Abstract: Artificial Intelligence (AI) has the potential to significantly impact the income of individuals. Cross-country data shows that introduction of AI is inequality enhancing in developing and less developed countries. In this paper, we attempt to understand the reason for increase in wage inequality across labourers due to introduction of AI, in a finite change General Equilibrium (GE) set up which allows for emergence of a new activity. AI-induced technological shock is introduced in the non-traded sector of an open economy with heterogeneous skills. We show how the advent of AI (which was initially non-existent) in the non-traded sector separates the skills of the once homogenous workers, thus, creating an intra-sectoral wage gap. What proportion of the low-skilled workers can move to the higher wage paying sector depends on an adaptability factor that acts as an eligibility criterion in fragmenting the erstwhile homogenous labourers and also works towards rising intra-group wage gap.
    Keywords: artificial intelligence, finite change, sectoral wage gap
    JEL: O33 J31 D50
    Date: 2022
  10. By: Ruofan Xu; Jiti Gao; Tatsushi Oka; Yoon-Jae Whang
    Abstract: We study the estimation of heterogeneous effects of group-level policies, using quantile regression with interactive fixed effects. Our approach can identify distributional policy effects, particularly effects on inequality, under a type of difference-in-differences assumption. We provide asymptotic properties of our estimators and an inferential method. We apply the model to evaluate the effect of the minimum wage policy on earnings between 1967 and 1980 in the United States. Our results suggest that the minimum wage policy has a significant negative impact on the between-inequality but little effect on the within-inequality.
    Keywords: Heterogeneous policy effects, quantile regression, interactive fixed effects
    JEL: C13 C31 J15 J31 J38
    Date: 2022
  11. By: Berlingieri, Francesco; Gathmann, Christina; Quinckhardt, Matthias
    Abstract: We study how the presence of a college affects the local economy using administrative data. Our analysis exploits the opening of new institutions of tertiary education across Germany in the 1980s and 1990s. The new college substantially increased the student population and share of high-skilled workers in the region. Yet, we find no effect on regional wages or employment indicating that the local economies did not experience additional growth through skill-biased technological change, for instance. Instead, there is sizable heterogeneity in the local gains: high-tech firms in manufacturing absorb most of the new college graduates, esp. in engineering professions. We find little impact on the low- or high-skilled service sector or employment in managerial professions. Finally, we show that local labor market conditions prior to the opening matter: in regions with a more dynamic labor market, the opening encourages firm creation and a permanent upskilling of the workforce. Areas with a less dynamic labor market experience little sustained growth in high-skilled workers who are absorbed by incumbent firms.
    Date: 2022
  12. By: E. Mark Curtis; Ioana Marinescu
    Abstract: Does the growth of renewable energy benefit US workers, and which workers stand to benefit the most? Until now, evidence on green energy jobs has been limited due to measurement issues. We use data on nearly all jobs posted online in the US, as collected by Burning Glass Technology, and we create a new measure of green jobs, defined here as solar and wind jobs. We use job titles and task requirements to define green jobs. We find that both solar and wind job postings have more than tripled since 2010, with solar jobs seeing especially strong growth that precedes the growth of new installed solar capacity. In 2019, we identify approximately 52,500 solar job openings and 13,500 wind job openings. Solar jobs are mostly (33%) in sales occupations, and in the utilities industry (16%). Wind jobs are most represented among installation and maintenance occupations (37%), and in the manufacturing industry (29%). Green jobs are created in occupations that are about 21% higher paying than average. The pay premium is even higher for jobs with a low educational requirement. Finally, green jobs tend to locate in counties with high shares of employment in fossil fuel extraction. Overall, our results suggest that the growth of renewable energy leads to the creation of relatively high paying jobs, which are more often than not located in areas that stand to lose from a decline in fossil fuel extraction jobs.
    JEL: J23 Q52
    Date: 2022–08
  13. By: Giovanni Gallo; Silvia Granato; michele Raitano
    Abstract: The Covid-19 pandemic appears to have engendered heterogeneous effects on individuals’ labour market prospects. This paper focuses on two possible sources of a heterogeneous exposition to labour market risks associated with the pandemic outbreak: the routine task content of the job and the teleworkability. To evaluate whether these dimensions played a crucial role in amplifying employment and wage gaps among workers, we focus on the case of Italy, the first EU country hit by the Covid-19 first wave. We use a static microsimulation model based on data from the Statistics on Income and Living Condition survey (IT-SILC) enriched with administrative data and aligned to monthly observed labour market dynamics by industry and regions. We simulate changes in the wage distribution in 2020 and investigate whether income drops risks – before and after income support measures to capture the effect of public redistribution – differed among workers whose jobs are characterised by a different degree of routinization (as proxied by the routine task intensity - RTI index) and teleworkability (as proxied by the TWA index). We find that RTI and TWA are negatively and positively associated with wages, respectively, and they are correlated with higher (respectively lower) risks of a large labour income drop due to the pandemic. However, differences in income drop risks for workers who differ by RTI and TWA largely reduce when income support measures are considered.
    Keywords: Covid-19, earnings distribution, inequality, income support measures, task routinization, teleworkability, Italy, nowcasting.
    JEL: D31 H24 I38 J31 C15
    Date: 2022–08
  14. By: Katharina Brütt (University of Amsterdam); Huaiping Yuan (University of Amsterdam)
    Abstract: Wage transparency regulation is widely considered and adopted as a tool to reduce the gender wage gap. We combine field and laboratory evidence to address how and when wage transparency can be effective and explore the role of belief adjustments as a mechanism. In the field, this paper studies a German wage transparency policy that allows employees to request wage information of comparable employees. Exploiting variation across firm size and time, we first provide causal evidence that this regulation does not affect the gender wage gap. In an online laboratory experiment, we study whether the failure of this policy hinges on two aspects: (1) the endogenous availability of wage information, and (2) the absence of performance information. Our data underline the importance of both factors. In contrast to endogenously acquired wage information, exogenously provided wage information does increase overall wages. So does the provision of performance information. However, none of these types of information reduce the gender wage gap. Wage information even deters women from entering negotiations.
    Keywords: Gender pay gap, Negotiations, Transparency
    JEL: J08 J16 J31 C91
    Date: 2022–08–23
  15. By: Thomas Buser (University of Amsterdam); Roel van Veldhuizen (Lund University); Yang Zhong (University of Amsterdam)
    Abstract: Many professional and educational settings require individuals to be willing and able to perform under time pressure. We use a lab experiment to elicit preferences for working under time pressure in an incentivized way by eliciting the minimum additional payment participants require to complete a cognitive task under various levels of time pressure versus completing it without pressure. We make three main contributions. First, we document that participants are averse to working under time pressure on aggregate. Second, we show that there is substantial heterogeneity in the degree of time pressure aversion across individuals and that these individual preferences can be partially captured by simple survey questions. Third, we include these questions in a survey of bachelor students and show that time pressure preferences correlate with future career plans. Our results indicate that individual differences in time pressure aversion could be an influential factor in determining labor market outcomes.
    JEL: J24 D9 C91
    Date: 2022–08–22
  16. By: Zhuang, Maiting (Stockholm Institute of Transition Economics); Garz , Marcel (Jonkoping University)
    Abstract: We study the effect of media coverage on individual behaviour during a public health crisis. For this purpose, we collect a unique dataset of 200,000 newspaper articles about the Covid-19 pandemic from Sweden - one of the few countries that did not impose mandatory lockdowns or curfews. We show that mentions of Covid-19 significantly lowered the number of visits to workplaces and retail and recreation areas, while increasing the duration of stays in residential locations. Using two different identification strategies, we show that these effects are causal. The impacts are largest when Covid-19 news stories are more locally relevant, more visible and more factual. We find larger behavioural effects for articles that reference crisis managers (as opposed to medical experts) and contain explicit public health advice. These results have wider implications for the design of public communications and the value of the local media.
    Keywords: Covid-19; Mobility; Newspapers; Persuasion; Public health
    JEL: D83 H12 I12 I18 J22 L82
    Date: 2022–08–02
  17. By: Kelly, E.;; Propper, C.;; Zaranko, B.;
    Abstract: We study the impact of team composition on productivity in a setting where team production is particularly important: nursing teams in the English National Health Service (NHS). Composition is measured both in terms of the quantity of staff and the quality of staff, as measured by qualifications, rank and experience. We use a panel dataset that links daily staffing rotas with inpatient mortality records for a single NHS Trust that includes 3 large hospitals and 52 wards. Our results show that the probability of a patient death is lower for teams with a greater number of qualified and senior nursing staff, but find no statistically significant impacts of increased numbers of support staff or agency workers. There are returns to experience for qualified staff, with a lower probability of a patient death in teams where nurses have more experience in the Trust, and returns to both team- and ward (physical location)-specific experience, with a lower probability of death for patients treated by staff who regularly work together and on the ward in question. Our results also provide evidence of the value of bosses, with higher mortality rates when there is an unexpected absence of a senior nurse who leads the team.
    JEL: I11 J24 J45 M50
    Date: 2022–07
  18. By: McCarthy, Paul X.; Kern, Margaret L.; Gong, Xian; Parker, Michael; Rizoiu, Marian-Andrei
    Abstract: Using large scale data sets about Australians (n=99,897) active on social media in a variety of occupations (n=624) across all industries, we used a variety of linguistic analysis techniques to infer user’s happiness, engagement and Big5 personality traits across 30 dimensions, as well as their occupational-personality fit when compared to others in the same role. We found that: (a) when roles are clustered by the personality traits of those in them there appears to be eight groups or ‘tribes’ made up of roles with similar personality trait combinations; (b) happiness, as measured by inferred current happiness, is positively correlated with occupation-personality fit and; (c) engagement is significantly correlated with occupation-personality fit and can explain over 25% of the variance in engagement in a sample of 18k people across 624 roles. These findings show that occupation and personality fit play a material and significant role in employee engagement, which in turn is known to have many firm-level and economy-wide outcomes.
    Keywords: Occupational Choice; Labor Productivity; Employee Engagement; Occupation-Fit; Personality.
    JEL: J24
    Date: 2022–06–01
  19. By: Pamela Giustinelli (Bocconi University)
    Abstract: This paper reviews the economic literature on subjective expectations in education with a focus on high income countries. It begins with highlighting the motivations that prompted systematic survey elicitation and statistical analysis of youth's expectations of the returns to schooling and with tracing key milestones in the development of this research program. It then proceeds to reviewing the relevant body of research by organizing the discussion around four topics: (i) the analysis of the perceived monetary returns, risks, and costs of schooling; (ii) the analysis of the perceived nonmonetary returns, risks, and costs of schooling; (iii) the analysis of schooling decisions; (iv) the analysis of expectation formation and learning. For each topic, the paper provides: (a) a motivating analytical framework; (b) a methodological discussion of expectations elicitation and a survey of data collections; (c) a review of the empirical evidence. Avenues for future research are discussed in the conclusion.
    Keywords: education, expectations, returns to schooling, schooling decisions, subjective probabilities, survey elicitation, uncertainty
    JEL: D84 I26 J24
  20. By: Magaly Faride Herrera Giraldo; Carlos Giovanni González Espitia
    Abstract: The study of the spatial distribution of homicides in historically violent cities is important because it provides new interpretations and potential policies for regions that are characterized by a persistent level of crime. While labor market characteristics have been correlated with its presence, few works have examined spatial patterns with the informal labor market. The empirical strategy begins with the calculation of the Moran index and the LISA test, which confirm a spatial association of homicides in neighborhoods. Subsequently, some linear regression models and a Spatial Durbin Model are estimated to confirm the correlation between homicides and the informal labor market. Finally, the intuition of this spatial correlation is shown in some maps. The main results show that the effect of the labor market on homicides does not come from the characteristics of the formal labor market but from the informal labor market, where working conditions are more precarious (no employment contract, health insurance, unemployment insurance, retirement pension, etc.). Thus, the bulk of this effect occurs in some hillside neighborhoods, areas with characteristics associated with informality, illegality, poverty and the lack of public investment in basic services such as electricity, water supply, sewerage or unpaved streets. These results have practical implications for understanding the correlation between economic incentives and crime in developing countries and in less favored cities in developed regions.
    Keywords: homicides, labor informality, hillside, emerging hot spot analysis.
    JEL: K14 K42 J46 C31
    Date: 2022–08–22
  21. By: David Popp; Francesco Vona; Myriam Grégoire-Zawilski; Giovanni Marin
    Abstract: The costs of low-carbon energy fell dramatically over the past decade, leading to rapid growth in its deployment. However, many challenges remain to deploy low-carbon energy at a scale necessary to meet net zero carbon emission targets. We argue that developing complementary technologies and skills must feature prominently in the next wave of low-carbon energy innovation. These include both improvements in physical capital, such as smart grids to aid integration of intermittent renewables, and human capital, to develop the skills workers need for a low-carbon economy. We document recent trends in energy innovation and discuss the lessons learnt for policy. We then discuss the need for complementary innovation in both physical capital—using smart grids as an example of how policy can help—and human capital, where we show how a task approach to labor informs policy and research on the worker skills needed for the energy transition.
    Keywords: low-carbon energy, innovation, patents, human capital, skills
    JEL: J24 O31 O38 Q42 Q55
    Date: 2022

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