nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2022‒09‒26
twenty-six papers chosen by
Joseph Marchand
University of Alberta

  1. Income Taxes, Gross Hourly Wages, and the Anatomy of Behavioral Responses: Evidence from a Danish Tax Reform By Sumiya, Kazuhiko; Bagger, Jesper
  2. Computers as Stepping Stones? Technological Change and Equality of Labor Market Opportunities By Melanie Arntz; Cäcilia Lipowski; Guido Neidhöfer; Ulrich Zierahn-Weilage
  3. New Frontiers: The Origins and Content of New Work, 1940–2018 By David Autor; Caroline Chin; Anna M. Salomons; Bryan Seegmiller
  4. Industry Choice and within Industry Earnings Effects By Eric Brunner; Shaun Dougherty; Stephen Ross
  5. Personality traits, remote work and productivity By Gavoille, Nicolas; Hazans, Mihails
  6. International Assortative Matching in the European Labor Market By Thomas Peeters; Jan C. van Ours
  7. The UK Gender Pay Gap: Does Firm Size Matter? By Jones, Melanie; Kaya, Ezgi
  8. Automation After the Assembly Line: Computerized Machine Tools, Employment and Productivity in the United States By Leah Platt Boustan; Jiwon Choi; David Clingingsmith
  9. Where Have All the Workers Gone? Recalls, Retirements, and Reallocation in the COVID Recovery By Eliza Forsythe; Lisa B. Kahn; Fabian Lange; David G. Wiczer
  10. Migration and firm-level productivity By Richard Fabling; David C Maré; Philip Stevens
  11. Which wage distributions are consistent with statistical discrimination? By Rahul Deb; Ludovic Renou
  12. Information and Communication Technology, Hierarchy, and Job Design By Gerten, Elisa; Beckmann, Michael; Kräkel, Matthias
  13. Working from home, pandemic, occupations, industries By Vahagn Jerbashian; Montserrat Vilalta-Bufí
  14. Material Incentives and Effort Choice: Evidence from an Online Experiment Across Countries By Elwyn Davies; Marcel Fafchamps
  15. Using Online Vacancy and Job Applicants' Data to Study Skills Dynamics By Bennett, Fidel; Escudero, Veronica; Liepmann, Hannah; Podjanin, Ana
  16. Occupational sorting on genes By Thomas Buser; Rafael Ahlskog; Magnus Johannesson; Sven Oskarsson
  17. COVID-19 and entrepreneurship entry and exit: Opportunity amidst adversity By Otrachshenko, Vladimir; Popova, Olga; Nikolova, Milena; Tyurina, Elena
  18. "The double-dividend of training" - Labour market effects of work-related continuous education in Switzerland By Stefan Denzler; Jens Ruhose; Stefan C. Wolter
  19. When Death was Postponed: The Effect of HIV Medication on Work and Marriage By Mette Ejrnæs; Esteban García-Miralles; Mette Gørtz; Petter Lundborg
  20. College admission as a screening and sorting device By Gandil, Mikkel; Leuven, Edwin
  21. What Makes a Program Good? Evidence from Short-Cycle Higher Education Programs in Five Developing Countries By Lelys I. Dinarte Diaz; Maria Marta Ferreyra; Sergio S. Urzúa; Marina Bassi
  22. Consumption and Hours in the United States and Europe By Lei Fang; Fang Yang
  23. Social protection and foundational cognitive skills during adolescence: evidence from a large Public Works Programme By Richard Freund; Marta Favara; Catherine Porter; Jere Behrman
  24. Investing in Infants: The Lasting Effects of Cash Transfers to New Families By Andrew C. Barr; Jonathan Eggleston; Alexander A. Smith
  25. Does Occupational Licensing Reduce Value Creation on Digital Platforms? By Peter Q. Blair; Mischa Fisher
  26. Real-Time Poverty, Material Well-Being, and the Child Tax Credit By Jeehoon Han; Bruce D. Meyer; James X. Sullivan

  1. By: Sumiya, Kazuhiko (Waseda University); Bagger, Jesper (Royal Holloway, University of London)
    Abstract: This paper provides quasi-experimental evidence on the effects of income taxes on gross hourly wages by utilizing administrative data and a tax reform in Denmark. The reform introduced joint taxation to a middle tax bracket, bringing large changes to the tax system facing married couples. Using variation in spousal income for identification, we present non-parametric graphical evidence based on a difference-in-differences design among working married males. First, we find hetero- geneous effects across income levels. For low-income workers, taxes have negative and dynamic effects on wages. Their elasticity of wages (with respect to net-of-marginal-tax rates) is close to one. For higher-income workers, the effects are small and static, with an elasticity of approximately 0.2. Second, wages respond to taxes through human capital accumulation and job changes. Finally, with smaller magnitudes than wages, daily hours worked also respond negatively to taxes, which contrasts with the prediction from a standard labor supply-and-demand model.
    Keywords: income taxation, administrative data, tax reforms, difference-in-differences, gross hourly wages, labor supply, human capital accumulation, job changes
    JEL: H22 H24 J22 J24 J30 J62
    Date: 2022–08
  2. By: Melanie Arntz (ZEW - Leibniz Centre for European Economic Research, Mannheim); Cäcilia Lipowski (ZEW - Leibniz Centre for European Economic Research, Mannheim); Guido Neidhöfer (ZEW - Leibniz Centre for European Economic Research, Mannheim); Ulrich Zierahn-Weilage (Utrecht University School of Economics)
    Abstract: This paper analyzes whether technological change improves equality of labor market opportunities by increasing the returns to skills relative to the returns to parental background. We find that in Germany during the 1990s, computer-driven technological change improved the access to technology-adopting occupations for workers with low-educated parents, and reduced their wage penalty within these occupations.We also show that this significantly contributed to a decline in the overall wage penalty experienced by workers from disadvantaged parental backgrounds over this time period.Competing mechanisms, such as skill-specific labor supply shocks and skill-upgrading, do not explain these findings.
    Keywords: Skill-biased technical change, wage inequality, equality of opportunity, intergenerational persistence, parental background, class ceiling
    JEL: J21 J23 J24 J31 J62 O33
    Date: 2022–08
  3. By: David Autor; Caroline Chin; Anna M. Salomons; Bryan Seegmiller
    Abstract: We address three core questions about the hypothesized role of newly emerging job categories ('new work') in counterbalancing the erosive effect of task-displacing automation on labor demand: what is the substantive content of new work; where does it come from; and what effect does it have on labor demand? To address these questions, we construct a novel database spanning eight decades of new job titles linked both to US Census microdata and to patent-based measures of occupations’ exposure to labor-augmenting and labor-automating innovations. We find, first, that the majority of current employment is in new job specialties introduced after 1940, but the locus of new work creation has shifted—from middle-paid production and clerical occupations over 1940–1980, to high-paid professional and, secondarily, low-paid services since 1980. Second, new work emerges in response to technological innovations that complement the outputs of occupations and demand shocks that raise occupational demand; conversely, innovations that automate tasks or reduce occupational demand slow new work emergence. Third, although flows of augmentation and automation innovations are positively correlated across occupations, the former boosts occupational labor demand while the latter depresses it. Harnessing shocks to the flow of augmentation and automation innovations spurred by breakthrough innovations two decades earlier, we establish that the effects of augmentation and automation innovations on new work emergence and occupational labor demand are causal. Finally, our results suggest that the demand-eroding effects of automation innovations have intensified in the last four decades while the demand-increasing effects of augmentation innovations have not.
    JEL: E24 J11 J23 J24
    Date: 2022–08
  4. By: Eric Brunner; Shaun Dougherty; Stephen Ross
    Abstract: We examine the effect of attending stand-alone technical high schools on the industry of employment and within industry earnings premiums using a regression discontinuity design. We study the universe of students that applied to the Connecticut Technical Education and Career System (CTECS) between 2006 and 2011. CTECS admission shifts male applicants towards higher paying industries that align with CTECS programs of study, but has a much more modest impact on the industry of employment for female applicants. Further, key industry effects observed for females shift these applicants towards lower paying industries. Surprisingly, overall industry earnings premiums and treatment effects of CTECS on earnings premiums are similar for female applicants in traditionally male dominated industries like manufacturing and construction. However, female representation in these industries is too small to contribute substantially to female earnings in aggregate. For male applicants, mechanism analyses show that treatment effects in manufacturing and construction depend in part on work experience while in high school and as a young adult. Alternatively, in professional and office support industries, treatment effects on earnings arise through selection of students with high 8th grade tests scores into these industries because they offer a higher direct return to cognitive skills.
    JEL: I25 I26 J24 J30
    Date: 2022–08
  5. By: Gavoille, Nicolas; Hazans, Mihails
    Abstract: The future of teleworking ultimately depends on its impact on workers' productivity and wellbeing, yet the effect of remote working on productivity is not well understood. This paper investigates the link between personality traits and workers' productivity when working from home. We exploit a survey providing measures of the "Big Five" personality traits for more than 1700 recent teleworkers. We document strong links between personality, productivity, and willingness to work from home post-pandemic. Ceteris paribus, Conscientiousness and Openness to Experience are positively associated with a higher productivity from home, especially for females. On the other hand, the link between Extraversion and preference for teleworking is negative. These results suggest that a one-size-fits-all policy is unlikely to maximize neither firms' productivity nor workers' satisfaction.
    Keywords: Personality traits,teleworking,work from home,productivity,COVID
    JEL: J24 J32 J81
    Date: 2022
  6. By: Thomas Peeters (Erasmus University Rotterdam); Jan C. van Ours (Erasmus University Rotterdam)
    Abstract: We investigate whether national borders within Europe hinder the assortative matching of workers to firms in a high skilled labor market. We characterize worker productivity as the ability to contribute to physical output and define firm productivity as the capacity to transform physical output into revenues. We rank workers and firms according to their individual productivity estimates and study the ensuing rank correlation to gauge the degree of assortative matching within and across countries. We find strong evidence for positive assortative matching at the national level, and even more so at the international level. This suggests national borders do not prevent workers and firm from pursuing profitable complementarities in production.
    Keywords: Assortative matching, international worker mobility, football managers
    JEL: M51 J63 J24 Z22
    Date: 2022–09–01
  7. By: Jones, Melanie; Kaya, Ezgi
    Abstract: Motivated by the introduction of the UK Gender Pay Gap Reporting legislation to large firms, defined as over 250 employees, we use linked employee-employer panel data from the Annual Survey of Hours and Earnings to explore pre-legislation variation in the gender pay gap by firm size. In doing so, we integrate two prominent but distinct empirical regularities in the labour economics literature, namely the gender pay gap and firm-size wage premium. We find evidence of both a larger raw and unexplained gender pay gap among large relative to smaller firms in the UK private sector even after controlling for unobserved worker heterogeneity, consistent with the legislation being effectively targeted. However, this conclusion changes after accounting for unobserved firm level heterogeneity and focusing on within-firm gender pay gaps. Large firms have smaller within-firm raw gender pay gaps and similar unexplained gender pay gaps when compared to smaller firms. We find that this conclusion is not specific to the current firm size threshold of 250 employees but holds more generally, including at proposed extensions of the legislation to smaller firms.
    Keywords: gender pay gap,firm-size wage premium,linked employee-employer panel data,pay transparency
    JEL: J31 J71 J78
    Date: 2022
  8. By: Leah Platt Boustan; Jiwon Choi; David Clingingsmith
    Abstract: Since the 1970s, computerized machine tools have been replacing semi-skilled manufacturing workers, contributing to factory automation. We build a novel measure of exposure to computer numerical control (CNC) based on initial variation in tool types across industries and differential shifts toward CNC technology by tool type over time. Industries more exposed to CNC increased capital investment and experienced higher labor productivity. Total employment rose, with gains for college-educated workers and abstract tasks compensating for losses of less-educated workers and routine tasks. Employment gains were strongest for unionized jobs. Workers in exposed industries returned to school and relevant degree programs expanded.
    JEL: J24 N32
    Date: 2022–08
  9. By: Eliza Forsythe; Lisa B. Kahn; Fabian Lange; David G. Wiczer
    Abstract: At the onset of the COVID pandemic, the U.S. economy suddenly and swiftly lost 20 million jobs. Over the next two years, the economy has been on the recovery path. We assess the labor market two years into the COVID crisis. We show that early employment dynamics were almost entirely driven by temporary layoffs and later recalls. Taking these into account, we show that the labor market remained surprisingly tight throughout the crisis, despite the dramatic job losses. By spring, 2022, the labor market had largely recovered and was characterized by extremely tight markets and a slightly depressed employment-to-population ratio driven largely by retirements. Finally, we see surprisingly little evidence of excess reallocation, despite predictions that COVID would dramatically and permanently change the way we live and work. We do see that employment has reallocated somewhat away from low-skilled service jobs, and, in light of the job vacancy patterns, conclude that worker preferences or changes in job amenities are driving this shift. In addition, the retirements paved the way for movements up the job ladder, making low-skilled customer-facing jobs even less desirable.
    JEL: E24 E32 J21 J23 J26
    Date: 2022–08
  10. By: Richard Fabling (Productivity Commission); David C Maré (Motu Research); Philip Stevens (Productivity Commission)
    Abstract: We use linked employer-employee microdata for New Zealand to examine the relationship between firm-level productivity, wages and workforce composition. Jointly estimating production functions and firm-level wage bill equations, we compare migrant workers with NZ-born workers, through the lens of a derived "productivity-wage gap" that captures the difference in relative contribution to output and the wage bill. Whether we look at all industries using a common production function, or separately estimate results for the five largest sectors, we find that skilled and long-term migrants make contributions to output that exceed moderately-skilled NZ-born workers, with that higher contribution likely being due to a mix of skill differences and/or effort which is largely reflected in higher wages. Conversely, migrants that are not on skilled visas are associated with lower output and lower wages than moderately-skilled NZ-born, also consistent with a skills/effort narrative. The share of employment for long-term migrants has grown over time (from 2005 to 2019) and we show that their relative contribution to output appears to be increasing over the same period. Finally, we present tentative evidence that high-skilled NZ-born workers make a stronger contribution to output when they work in firms with higher migrant shares, which is suggestive of complementarities between the two groups or, at least, positive mutual sorting of these groups into higher productivity firms.
    Keywords: Migrant labour, firm productivity, worker sorting, wage determinants, quality-adjusted labour input
    JEL: D24 J15 J31
    Date: 2022–07
  11. By: Rahul Deb; Ludovic Renou
    Abstract: When are the wage distributions for two groups consistent with a general reduced form model of statistical discrimination? In our model, each group's productivities are drawn from different distributions with common means. Productivities are unobserved but inferred from noisy signals. Wages are determined by a strictly increasing (but otherwise unrestricted) function of the posterior expectation of the productivities (computed from the signal). We show that a pair of wage distributions are consistent with this model of statistical discrimination if, and only if, neither wage distribution first-order stochastically dominates the other. A rejection of this condition thus provides evidence of bias.
    Keywords: discrimination, nonparametric testing, inequality
    JEL: D02 D04 D31 J31 J70
    Date: 2022–09–10
  12. By: Gerten, Elisa (University of Cologne); Beckmann, Michael (University of Basel); Kräkel, Matthias (University of Bonn)
    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
  13. By: Vahagn Jerbashian (Universitat de Barcelona, BEAT, CREB, CESifo, and GLO); Montserrat Vilalta-Bufí (Universitat de Barcelona, BEAT, and CREB)
    Abstract: We use data from the EU Labour Force Survey for 8 countries and document the levels of working from home in the sample countries, industries, and occupations in the 2011-2019 period and its changes in 2020, the year when the COVID-19 pandemic started. We show that there are significant differences in working from home across countries, industries, and occupations and that working from home has increased almost everywhere in the 2011-2019 period and more significantly in 2020. Countries that had the lowest levels of working from home in 2019 enacted the most stringent stay-home and workplace closure policies and experienced the largest growth rates in working from home in 2020. Finally, we compute a measure of working from home capacity for the sample countries using the observed working from home levels.
    Keywords: Working from home, pandemic, occupations, industries.
    JEL: J23 J24
    Date: 2022
  14. By: Elwyn Davies; Marcel Fafchamps
    Abstract: We conduct an interactive online experiment framed as an employment contract between employer and worker. Subjects from the US, India, and Africa are matched in pairs within and, in some cases, across countries. Employers make a one-period offer to a worker who can either decline or choose a high or low effort. The offer is restricted to be from a variable set of possible contracts: high and low fixed wage; bonus and malus contracts; and bonus and malus with reneging. High effort is always efficient. Self-interest predicts a fraction of observed choices, but many choices are better explained either by conditional reciprocity or by intrinsic motivation. Subjects from India and Africa are more likely to follow intrinsic motivation and they provide high effort more often. US subjects are more likely to follow self-interest and reach a less efficient outcome on average, but workers earn slightly more. We find no evidence that workers favor employers from some countries or that employers treat workers from different countries differently. Individual characteristics and stated attitudes toward worker incentives are unable to predict the behavioral differences observed between countries, thus allowing the possible existence of cultural differences in the response to labor incentives.
    JEL: D9 J31 O12 O57
    Date: 2022–08
  15. By: Bennett, Fidel; Escudero, Veronica (ILO International Labour Organization); Liepmann, Hannah (ILO International Labour Organization); Podjanin, Ana (ILO International Labour Organization)
    Abstract: We assess whether online data on vacancies and applications to a job board are a suitable source for studying skills dynamics outside of Europe and the United States, where a rich literature has examined skills dynamics using online vacancy data. Yet, the knowledge on skills dynamics is scarce for other countries, irrespective of their level of development. We first propose a taxonomy that systematically aggregates three broad categories of skills – cognitive, socioemotional and manual – and fourteen commonly observed and recognizable skills sub-categories, which we define based on unique skills identified through keywords and expressions. Our aim is to develop a taxonomy that is comprehensive but succinct, suitable for the labour market realities of developing and emerging economies and adapted to online vacancies and applicants' data. Using machine-learning techniques, we then develop a methodology that allows implementing the skills taxonomy in online vacancy and applicants' data, thus capturing both the supply and the demand side. Implementing the methodology with Uruguayan data from the job board BuscoJobs, we assign skills to 64 per cent of applicants' employment spells and 94 per cent of vacancies. We consider this a successful implementation since the exploited text information often does not follow a standardized format. The advantage of our approach is its reliance on data that is currently available in many countries across the world, thereby allowing for country-specific analysis that does not need to assume that occupational skills bundles are the same across countries. To the best of our knowledge, we are the first to explore this approach in the context of emerging economies.
    Keywords: online data, job board, skills dynamics, skills taxonomy, natural language processing
    JEL: C81 J24 O33 O54
    Date: 2022–08
  16. By: Thomas Buser (University of Amsterdam); Rafael Ahlskog (Uppsala University); Magnus Johannesson (tockholm School of Economics); Sven Oskarsson (Uppsala University)
    Abstract: We use a novel approach to explore how people sort into different careers based on their personality skills. We link genetic data from individuals in the Swedish Twin Registry to government register data, making use of new polygenic indices that capture the genetic predispositions of individuals towards a range of relevant cognitive skills, personality traits, and economic preferences. We first present a detailed mapping of these genetic tendencies by occupation and study major. We show that – conditional on their socio-economic background – people who sort into different study majors and occupations differ significantly in their genetic predispositions. We then take advantage of random genetic variation between siblings to show that this sorting is at least partially due to a causal effect of genetic tendencies on career choices. Our results shed new light on the determinants of some of the most impactful decisions people must make in their lives.
    Keywords: personality traits, cognitive skills, behavioral genetics, labor markets, education
    JEL: D91 J24
    Date: 2022–09–07
  17. By: Otrachshenko, Vladimir; Popova, Olga; Nikolova, Milena; Tyurina, Elena
    Abstract: We theoretically and empirically examine how acquiring new skills and increased financial worries influenced entrepreneurship entry and exit intentions during the pandemic. To that end, we analyze primary survey data we collected in the aftermath of the COVID-19's first wave in Russia, which has had one of the highest COVID-19 infection rates globally. Our results show that acquiring new skills during the pandemic helps maintain an existing business and encourages start-ups in sectors other than information technology (IT). For IT start-ups, having previous experience matters more than new skills. While the pandemic-driven financial worries are associated with business closure intentions, they also inspire new business start-ups, highlighting the creative destruction power of the pandemic. Furthermore, preferences for formal employment and remote work also matter for entrepreneurial intentions. Our findings enhance the understanding of entrepreneurship formation and closure in a time of adversity and suggest that implementing entrepreneurship training and upskilling policies during the pandemic can be an important policy tool for innovative small business development.
    Keywords: business entry,information technology (IT),business closure,COVID-19,entrepreneurship intentions,self-employment,Russia
    JEL: E24 J24 L26 P20
    Date: 2022
  18. By: Stefan Denzler; Jens Ruhose; Stefan C. Wolter
    Abstract: This paper presents the first longitudinal estimates of the effect of work-related training on labour market outcomes in Switzerland. Using a novel dataset that links official census data on adult education to longitudinal register data on labour market outcomes, we apply a regression-adjusted matched difference-in-differences approach with entropy balancing to account for selection bias and sorting on gains. We find that training participation increases yearly earnings and reduces the risk of unemployment already two years after the treatment. However, the effects are heterogeneous as to gender, age, education, and regional labour market context. Gains are highest for middle aged men with formal vocational education working in either depressed or booming labour markets.
    Keywords: Continuous education, wages, unemployment, entropy balancing, Switzerland
    JEL: I21 I26 J24 M53
    Date: 2022–09
  19. By: Mette Ejrnæs (University of Copenhagen and CEBI); Esteban García-Miralles (Bank of Spain); Mette Gørtz (University of Copenhagen and CEBI); Petter Lundborg (IZA and Department of Economics, Lund University)
    Abstract: Over the last century, global life expectancy has increased tremendously. A longer planning horizon may change individuals’ incentives to work, save, and marry but it has proven challenging to disentangle such incentive effects from those of improved health. In this paper, we study how individuals diagnosed with HIV reacted to the introduction of HIV medicine in 1995, which dramatically increased their life expectancy. To isolate the incentive effect, we use Danish register data on HIV-infected individuals and compare how outcomes evolved for individuals who were diagnosed before and after the medicine was introduced, but whose health had not yet been affected by their HIV diagnosis. Our results show that increases in the life expectancy of HIV-infected individuals greatly reduced the negative effect of receiving a HIV diagnosis on labor supply and earnings but did not affect important financial decisions, despite a much longer investment horizon. An increased life expectancy also affected marital behavior, where those facing a longer life expectancy where less likely to marry or cohabit after receiving a HIV diagnosis. Our results highlight that life expectancy gains from medical innovations impact individuals’ incentives to work and marry, even when their underlying health is unchanged.
    Keywords: Life Expectancy, Labor Supply, Marriage, HIV
    JEL: D84 I12 J12 J21
    Date: 2022–07–19
  20. By: Gandil, Mikkel (Dept. of Economics, University of Oslo); Leuven, Edwin (Dept. of Economics, University of Oslo)
    Abstract: How can colleges find successful applicants? Criteria such as GPA, interviews, essays, and tests provide information about candidates, but which work and why? We shed light on these questions using unique data on the universe of objective and subjective rankings of all college applicants in Denmark, their applications, admissions and college outcomes. We implement a regression discontinuity design across multiple admission quotas to estimate how admission affects program and college completion, and investigate how this depends on the evaluative criteria used. We find that admission based on alternative criteria outperforms standard admission based on GPA. Alternative criteria are more effective in identifying good program matches, which ultimately leads to higher college completion rates because alternative evaluation is more likely to admit students that tend to struggle elsewhere. Most of the impact of alternative evaluation is found to be due to their impact on the applicant pool (sorting). This suggest that application costs play an important role when selecting likely-successful applicants. Our analysis of the evaluation technology shows that the use of individual grades leads to the admission of applicants that are less likely to succeed. The use of tests and CVs does however have robust positive effects which are explained by their impact on sorting and not because they allow programs to select more successful students from a given pool of applicants. Essays is the only criterion that is intrinsically better at screening out applicants that will do well in the program or in college more broadly. The use of tests, interviews and CVs do not outperform GPA in screening once we keep the application pool fixed. There is no evidence that interviews are an effective admission tool.
    Keywords: college admission; higher education
    JEL: D04 H43 I23 I28 J24
    Date: 2022–09–01
  21. By: Lelys I. Dinarte Diaz; Maria Marta Ferreyra; Sergio S. Urzúa; Marina Bassi
    Abstract: Short-cycle higher education programs (SCPs) can play a central role in skill development and higher education expansion, yet their quality varies greatly within and among countries. In this paper we explore the relationship between programs’ practices and inputs (quality determinants) and student academic and labor market outcomes. We design and conduct a novel survey to collect program-level information on quality determinants and average outcomes for Brazil, Colombia, Dominican Republic, Ecuador, and Peru. Categories of quality determinants include training and curriculum, infrastructure, faculty, link with productive sector, costs and funding, and other practices on student admission and institutional governance. We also collect administrative, student-level data on higher education and formal employment for SCP students in Brazil and Ecuador and match it to survey data. Using machine learning methods, we select the quality determinants that predict outcomes at the program and student levels. Estimates indicate that some quality determinants may favor academic and labor market outcomes while others may hinder them. Two practices predict improvements in all labor market outcomes in Brazil and Ecuador—teaching numerical competencies and providing job market information—and one practice—teaching numerical competencies—additionally predicts improvements in labor market outcomes for all survey countries. Since quality determinants account for 20-40 percent of the explained variation in student-level outcomes, estimates indicate a role for quality determinants to shrink the quality gap among programs. These findings have implications for the design and replication of high-quality SCPs, their regulation, and the development of information systems.
    JEL: I2 J24
    Date: 2022–08
  22. By: Lei Fang; Fang Yang
    Abstract: We document large differences between the United States and Europe in allocations of expenditures and time for both market and home activities. Using a life-cycle model with home production and endogenous retirement, we find that the cross-country differences in consumption tax, social security system, income tax and TFP together can account for 68-95 percent of the cross-country variations and more than half of the average differences between Europe and the United States in aggregate hours and expenditures. These factors can also account well for the cross-country differences in allocations by age and generate substantially lower market hours in Europe for the age group of sixty and above as in the data. All the factors, except income tax, are quantitatively important for determining cross-country differences in expenditure allocations. While the differences in social security system and income tax are crucial in explaining the difference in market hours around retirement ages, TFP and consumption tax are more important for the difference in market hours for prime ages.
    Keywords: Consumption expenditure; home production; labor supply; fiscal policy
    JEL: E21 E62 J22 O57 H31
    Date: 2022–09–08
  23. By: Richard Freund (University of Oxford); Marta Favara (University of Oxford); Catherine Porter (Lancaster University, University of Oxford); Jere Behrman (University of Pennsylvania)
    Abstract: Many low- and middle-income countries have introduced Public Works Programmes (PWPs) to fight poverty. PWPs provide temporary cash-for-work opportunities to boost poor households’ incomes and to provide better infrastructure to local communities. While PWPs do not target children directly, the increased demand for adult labour may affect children’s development through increasing households’ incomes and changing household members’ time uses. This paper expands on a multidimensional literature showing the relationship between early life circumstances and learning outcomes and provides the first evidence that children from families who benefit from PWPs show increased foundational cognitive skills (FCS). We focus on four child FCS: inhibitory control, working memory, long-term memory, and implicit learning. Our results, based on unique tablet-based data collected as part of a 20-year longitudinal survey, show positive associations of family participation in the Productive Safety Net Programme (PSNP) in Ethiopia during childhood on long-term memory and implicit learning, with weaker evidence for working memory. These associations appear to be strongest for children whose households were still PSNP participants in the year of data collection. We find suggestive evidence that, the association with implicit learning may be operating through children’s time reallocation away from unpaid labour responsibilities, while the association with long-term memory may be due to the programme’s success in remediating nutritional deficits caused by early life rainfall shocks. Our results suggest that policy interventions such as PWPs may be able to mitigate the effects of early poverty on cognitive skills formation and thereby improve children’s potential future outcomes.
    Keywords: foundational cognitive skills; Ethiopia; public works programmes; PSNP; skills development
    JEL: J24 I2 I1
    Date: 2022–09–09
  24. By: Andrew C. Barr; Jonathan Eggleston; Alexander A. Smith
    Abstract: We provide new evidence that cash transfers following the birth of a first child can have large and long-lasting effects on that child’s outcomes. We take advantage of the January 1 birthdate cutoff for U.S. child-related tax benefits, which results in families of otherwise similar children receiving substantially different refunds during the first year of life. For the average low-income single-child family in our sample this difference amounts to roughly $1,300, or 10 percent of income. Using the universe of administrative federal tax data in selected years, we show that this transfer in infancy increases young adult earnings by at least 1 to 2 percent, with larger effects for males. These effects show up at earlier ages in terms of improved math and reading test scores and a higher likelihood of high school graduation. The observed effects on shorter-run parental outcomes suggest that additional liquidity during the critical window following the birth of a first child leads to persistent increases in family income that likely contribute to the downstream effects on children’s outcomes. The longer-term effects on child earnings alone are large enough that the transfer pays for itself through subsequent increases in federal income tax revenue.
    JEL: H24 H31 I2 I21 I3 I38 J13 J24 J62
    Date: 2022–08
  25. By: Peter Q. Blair; Mischa Fisher
    Abstract: We test whether occupational licensing undercuts a key goal of digital marketplaces— to increase social surplus by increasing the effectiveness of customer search. Our setting is a large online marketplace in the $500B home services industry where a platform converts customer search into sales leads that are accepted for purchase by service providers on the platform. For each of the 21 million observations in our data set, we observe task-level variation in the state licensing requirements that service providers must meet to operate on the platform. Exploiting two natural experiments, we find that licensing reduces the accept rate of sales leads by an average of 25 percent. The accept rate drops because licensing reduces the aggregate labor supply of workers on the platform and not because licensing increases the volume of customer search. We develop a model and derive analytic expressions for the impact of licensing on the welfare of consumers, service providers and the platform as a function of seven sufficient statistics which we estimate from the data. We find that licensing a task reduces service provider surplus and platform surplus without increasing consumer surplus.
    JEL: D60 J44 L51 L86
    Date: 2022–08
  26. By: Jeehoon Han; Bruce D. Meyer; James X. Sullivan
    Abstract: In response to the COVID-19 pandemic two new timely poverty measures have been developed to monitor fast-changing economic conditions for the most deprived. The Han et al. near real-time poverty measure uses responses to a global income question on the Monthly Current Population Survey (CPS) that is available for a subsample of those surveyed. The CPSP monthly poverty measure, widely cited in the media, uses data from the Annual Social and Economic Supplement to the CPS and other sources to impute poverty in the Monthly CPS sample based on demographic and employment variables. This paper evaluates the two measures and their estimates of child poverty around the 2021 temporary changes to the Child Tax Credit (CTC). We argue that conceptually the measure based on responses rather than the one based on imputations is preferable, though both measures suffer from important drawbacks. We also conclude that widely publicized claims that child poverty fell by 25 percent when the Advance CTC payments started and subsequently rose by 41 percent when they ended are based on weak evidence and are overstated. The best evidence, though still imperfect, suggests poverty was relatively stable in 2021 and the first half of 2022. Part of the explanation for the lack of change appears to be a compensating decline in employment among low-skilled workers with children. Other evidence tying changes in well-being to the tax credit is confounded by other policy changes.
    JEL: C42 C81 H2 I32 I38 J20
    Date: 2022–08

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