nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2022‒11‒21
fourteen papers chosen by
Joseph Marchand
University of Alberta

  1. Who’s fit for the low-carbon transition? Emerging skills and wage gaps in job and data By Aurélien Saussay; Misato Sato; Francesco Vona; Layla O’Kane
  2. The role of within-occupation task changes in wage development By Bachmann, Ronald; Demir, Gökay; Green, Colin; Uhlendorff, Arne
  3. The Heterogenous Effects of Employers’ Concentration on Wages: Better Sorting or Uneven Rent Extracting? By Axelle Arquié; Julia Bertin
  4. Informal institution meets child development By Tang, Can; Zhao, Zhong
  5. Behavioural responses to income taxation in Norway By Graber, Michael; Mogstad, Magne; Torsvik, Gaute; Vestad, Ola
  6. Instrumental variables with unordered treatments: Theory and evidence from returns to fields of study By Heinesen, Eskil; Hvid, Christian; Kirkebøen, Lars; Leuven, Edwin; Mogstad, Magne
  7. An Arab, an Asian, and a Black guy walk into a job interview: ethnic stigma in hiring after controlling for social class By Hannah Van Borm; Louis Lippens; Stijn Baert
  8. Nonlinear Taxation of Income and Education in the Presence of Income-Misreporting By Spencer Bastani; Firouz Gahvari; Luca Micheletto
  9. Aversion to Hiring Algorithms: Transparency, Gender Profiling, and Self-Confidence By Marie-Pierre Dargnies; Rustamdjan Hakimov; Dorothea Kübler
  10. Gender Equity Insights 2022: The state of inequality in Australia By Alan S Duncan; Silvia Salazar
  11. Should Mothers Work? How Perceptions of the Social Norm Affect Individual Attitudes Toward Work in the U.S. By Patricia Cortes; Gizem Koşar; Jessica Pan; Basit Zafar
  12. On the Elasticity of Substitution between Labor and ICT and IP Capital and Traditional Capital By Vahagn Jerbashian
  13. Trading away incentives By Colonnello, Stefano; Curatola, Giuliano Antonio; Xia, Shuo
  14. Trade with Nominal Rigidities: Understanding the Unemployment and Welfare Effects of the China Shock By Andrés Rodríguez-Clare; Mauricio Ulate; Jose P. Vasquez

  1. By: Aurélien Saussay (Grantham Research Institute, London School of Economics and Political Science and OFCE, Sciences Po); Misato Sato (Grantham Research Institute, London School of Economics and Political Science); Francesco Vona (University of Milan, Fondazione Eni Enrico Mattei and OFCE, Sciences Po); Layla O’Kane (Lightcast)
    Abstract: As governments worldwide increase their commitments to tackling climate change, the number of low-carbon jobs are expected to grow rapidly. Here we provide evidence on the characteristics of low-carbon jobs in the US using comprehensive online job postings data between 2010-2019. By accurately identifying low-carbon jobs and comparing them to similar jobs in the same occupational group, we show that low-carbon jobs differ from high-carbon or generic jobs in a number of important ways. Low-carbon jobs have higher skill requirements across a broad range of skills, especially technical ones. However, the wage premium for low-carbon jobs has declined over time and the geographic overlap between low- and high-carbon jobs is limited. Overall, our findings suggest the low-carbon transition entails potentially high labour reallocation costs associated with re-skilling and earning losses, indicating public investments in skills is needed to deliver a smooth and rapid transition.
    Keywords: Low-carbon jobs, fossil-fuel jobs, skill gaps, job vacancy data, green wage premium, distributional effects, low-carbon transition
    JEL: J23 J24 J31 Q52 Q54
    Date: 2022–10
  2. By: Bachmann, Ronald; Demir, Gökay; Green, Colin; Uhlendorff, Arne
    Abstract: We examine how changes in task content over time condition occupational wage development. Using survey data from Germany, we document substantial heterogeneity in within-occupational changes in task content. Combining this evidence with administrative data on individual employment outcomes over a 25-year period, we find important heterogeneity in wage penalties amongst initially routine intensive jobs. While occupations that remain (relatively) routine intensive generate substantial wage penalties, occupations with a decreasing routine intensity experience stable or even increasing wages. These findings cannot be explained by composition or cohort effects.
    Keywords: Technological progress,polarization,tasks,routine workers,training
    JEL: J31 J24 E24
    Date: 2022
  3. By: Axelle Arquié; Julia Bertin
    Abstract: Are workers equal in front of employers' concentration? We show, using instrumental variable estimations for France between 2000 and 2019, that employers' concentration has a negative heterogenous effect on wage, with the lowest earners being the most vulnerable. This increased wage inequality could reflect some efficiency gains if concentration allows employers to impose a more demanding selection process, improving sorting i.e. workers selection, thus generating both inequality and higher productivity. We find, exploring within-firm and between-firm inequality, that it is not the case. Employers' concentration instead generates wage inequality by undercutting relatively more the bargaining power of the lowest earners.
    Keywords: Labor Market Concentration;Inequality;Sorting
    JEL: J31 J42
    Date: 2022–10
  4. By: Tang, Can; Zhao, Zhong
    Abstract: Using a national representative sample, the China Family Panel Studies, this paper explores the influences of clan culture, a hallmark of Chinese cultural history, on the prevalence of child labor in China. We find that clan culture significantly reduces the incidence of child labor and working hours of child laborer. The results exhibit strong boy bias, and are driven by boys rather than girls, which reflects the patrilineal nature of Chinese clan culture. Moreover, the impact is greater on boys from households with lower socioeconomic status, and in rural areas. Clan culture acts as a supplement to formal institutions: reduces the incidence of child labor through risk sharing and easing credit constraints, and helps form social norms to promote human capital investment. We also employ an instrument variable approach and carry out a series of robustness checks to further confirm the findings.
    JEL: J21 J22 J81 O15
    Date: 2022–10–10
  5. By: Graber, Michael (SSB); Mogstad, Magne (University of Chicago); Torsvik, Gaute (Dept. of Economics, University of Oslo); Vestad, Ola (SSB)
    Abstract: In this report, we combine theory and empirical estimates for how labor earnings respond to changes in tax rates and non-earned income. We use lottery winnings to obtain variation in non-earned income and tax reforms to obtain variation in the net of tax rate. Combining this information with measures of extensive margin responses and the progressivity of the Norwegian income tax schedule, we are able to point identify uncompensated and compensated behavioral responses to income taxes and therefore to calculate efficiency losses and optimal income tax rates (for given welfare weights).
    Keywords: income effect; labor supply elasticities; lottery winnings; efficiency loss; optimal income taxation
    JEL: D15 H21 H31 H53 J22
    Date: 2022–10–27
  6. By: Heinesen, Eskil (Rockwool Foundation Research Unit); Hvid, Christian; Kirkebøen, Lars (Statistics Norway); Leuven, Edwin (Dept. of Economics, University of Oslo); Mogstad, Magne (Dept. of Economics, University of Oslo)
    Abstract: We revisit the identification argument of Kirkeboen et al. (2016) who showed how one may combine instruments for multiple unordered treatments with information about individuals’ ranking of these treatments to achieve identification while allowing for both observed and unobserved heterogeneity in treatment effects. We show that the key assumptions underlying their identification argument have testable implications. We also provide a new characterization of the bias that may arise if these assumptions are violated. Taken together, these results allow researchers not only to test the underlying assumptions, but also to argue whether the bias from violation of these assumptions are likely to be economically meaningful. Guided and motivated by these results, we estimate and compare the earnings payoffs to post-secondary fields of study in Norway and Denmark. In each country, we apply the identification argument of Kirkeboen et al. (2016) to data on individuals’ ranking of fields of study and field-specific instruments from discontinuities in the admission systems. We empirically examine whether and why the payoffs to fields of study differ across the two countries. We find strong cross-country correlation in the payoffs to fields of study, especially after removing fields with violations of the assumptions underlying the identification argument.
    Keywords: treatment effects; unordered choice; instrumental variables; field of study; earnings
    JEL: C31 J24 J31
    Date: 2022–10–01
  7. By: Hannah Van Borm; Louis Lippens; Stijn Baert (-)
    Abstract: Over the last decades, researchers have found compelling evidence of hiring discrimination toward ethnic minorities based on field experiments using fictitious job applications. Despite increasing efforts to discover why ethnic minorities experience hiring penalties, the academic world has not yet found a satisfying answer. With this study, we aim to close this gap in the literature by conducting a state-of-the-art scenario experiment with genuine American recruiters. In the experiment, we ask recruiters to assess fictitious job applicants of variousrace-ethnicities but consistent social class. The applicants are rated on 22 statements related to the dominant explanations for ethnic discrimination in hiring that the models of taste-based and statistical discrimination have offered. We find that different race-ethnicity groups are evaluated rather similarly, except for Asian Americans, who are perceived to have better intellectual abilities and organizational skills and to be more ambitious, motivated, efficient, and open. These results suggest that the hiring discrimination found in previous experimental research might be overestimated because part of the reported hiring penalty may be attributed to aspects other than race-ethnicity.
    Keywords: hiring, ethnic discrimination, statistical discrimination, social class, stigma
    JEL: J71 J15 J24
    Date: 2022–11
  8. By: Spencer Bastani; Firouz Gahvari; Luca Micheletto
    Abstract: We study the joint design of nonlinear income and education taxes when the government pursues redistributive objectives. A key feature of our setup is that the ability type of an agent can affect both the costs and benefits of acquiring education. Market remuneration of agents depends on both their innate ability type and their educational choices. Our focus is on the properties of constrained efficient allocations when educational choices are publicly observable at the individual level, but earned income is subject to misreporting. We find that income-misreporting (IM) affects the optimal distortions on income and education and shed light on the reasons for it and mechanisms through which it is done. We show how and why IM strengthens the case for downward distorting the educational choices of low-ability agents. Finally, we find that IM provides another mechanism that makes commodity taxation useful.
    Keywords: optimal taxation, education, human capital, income-misreporting, redistribution
    JEL: H21 H26 J31
    Date: 2022
  9. By: Marie-Pierre Dargnies; Rustamdjan Hakimov; Dorothea Kübler
    Abstract: We run an online experiment to study the origins of algorithm aversion. Participants are either in the role of workers or of managers. Workers perform three real-effort tasks: task 1, task 2, and the job task which is a combination of tasks 1 and 2. They choose whether the hiring decision between themselves and another worker is made either by a participant in the role of a manager or by an algorithm. In a second set of experiments, managers choose whether they want to delegate their hiring decisions to the algorithm. In the baseline treatments, we observe that workers choose the manager more often than the algorithm, and managers also prefer to make the hiring decisions themselves rather than delegate them to the algorithm. When the algorithm does not use workers’ gender to predict their job task performance and workers know this, they choose the algorithm more often. Providing details on how the algorithm works does not increase the preference for the algorithm, neither for workers nor for managers. Providing feedback to managers about their performance in hiring the best workers increases their preference for the algorithm, as managers are, on average, overconfident.
    Keywords: algorithm aversion, experiment, hiring discrimination, transparency
    Date: 2022
  10. By: Alan S Duncan (Bankwest Curtin Economics Centre (BCEC), Curtin University; Bankwest Curtin Economics Centre (BCEC), Curtin University); Silvia Salazar (Bankwest Curtin Economics Centre, Curtin University)
    Abstract: The seventh edition of the BCEC|WGEA Gender Equity Insights series looks at Australia’s gender pay gap and finds that it could narrow by a third if a more balanced gender concentration was achieved across all industries and occupations. Drawing on new Workplace Gender Equality Agency data, voluntarily reported for the first time in 2020-21, the report finds Australia’s gender pay gap would fall from an estimated 23.3 per cent to 15.6 per cent if a 40:40:20 gender concentration – 40 per cent women, 40 per cent men and 20 per cent any gender – was achieved across all industries and occupations. The BCEC|WGEA Gender Equity Insights 2022 report uses the new WGEA location data to compare pay metrics, gender pay gaps and organisational practices across Australia’s states and territories as well as regional areas. The analysis reveals the extent to which the overall gender pay gap is driven by higher concentrations of men in high salary industries and jobs, and higher shares of women working in lower salary sectors. The report found that for Western Australia – the state with the nation’s highest gender pay gap – the gap in total remuneration would halve from 32.1 per cent to 16.5 per cent if a 40:40:20 gender balance was achieved across all industries. In the Northern Territory, the gender pay gap would reduce by two thirds, while New South Wales and Victoria would see gender pay gaps fall by 7.4 and 6.5 percentage points respectively. Queensland recorded a larger margin of 8.8 percentage points.
    Keywords: gender equity, gender equality, gender segregation, industry segregation, women and leadership, age discrimination, gender pay gap, gender policies.
    JEL: J7 J4 M2 L2
    Date: 2022–10
  11. By: Patricia Cortes; Gizem Koşar; Jessica Pan; Basit Zafar
    Abstract: We study how peer beliefs shape individual attitudes toward maternal labor supply using realistic hypothetical scenarios that elicit recommendations on the labor supply choices of a mother with a young child and an information treatment embedded within representative surveys. Across the scenarios, we find that individuals systematically overestimate the extent of gender conservativeness among the people around them. Exposure to information on peer beliefs leads to a shift in recommendations, driven largely by information-based belief updating. The information treatment also increases (intended and actual) donations to a nonprofit organization advocating for women in the workplace.
    Keywords: expectations; social norms; information treatment
    JEL: D84 J22 C83
    Date: 2022–11–01
  12. By: Vahagn Jerbashian
    Abstract: I estimate CES aggregate production functions for the US, the UK, Japan, Germany, and Spain using data from the EU KLEMS database. I distinguish between three types of capital: information and communication technologies (ICT), intellectual property (IP) capital, and traditional capital. I assume that the aggregate output is produced using labor and these three types of capital and allow for differences in the elasticities of substitution between labor, an aggregate of ICT and IP capital, and traditional capital. The estimated elasticities of substitution between ICT and IP capital are strictly below one for all sample countries implying gross complementarity. ICT and IP capital together are gross substitutes for labor while traditional capital is a gross complement. The results for the US imply that the fast pace of technological progress in ICT and IP capital accumulation together are responsible for about 80 percent of the fall in labor income share.
    Keywords: CES production function, elasticities of substitution, system of equations, ICT, IP capital, traditional capital
    JEL: E22 E25 J23 O33
    Date: 2022
  13. By: Colonnello, Stefano; Curatola, Giuliano Antonio; Xia, Shuo
    Abstract: Equity pay has been the primary component of managerial compensation packages at US public firms since the early 1990s. Using a comprehensive sample of top executives from 1992-2020, we estimate to what extent they trade firm equity held in their portfolios to neutralize increments in ownership due to annual equity pay. Executives accommodate ownership increases linked to options awards. Conversely, increases in stock holdings linked to option exercises and restricted stock grants are largely neutralized through comparable sales of unrestricted shares. Variation in stock trading responses across executives hardly appears to respond to diversification motives. From a theoretical standpoint, these results challenge (i) the common, generally implicit assumption that managers cannot undo their incentive packages, (ii) the standard modeling practice of treating different equity pay items homogeneously, and (iii) the often taken for granted crucial role of diversification motives in managers' portfolio choices.
    Keywords: dynamic contracting,equity incentives,executive compensation,hedging,insider trading
    JEL: G32 G34 J33 M12 M52
    Date: 2022
  14. By: Andrés Rodríguez-Clare; Mauricio Ulate; Jose P. Vasquez
    Abstract: We present a dynamic quantitative trade and migration model that incorporates downward nominal wage rigidities and show how this framework can generate changes in unemployment and labor participation that match those uncovered by the empirical literature studying the “China shock.” We find that the China shock leads to average welfare increases in most U.S. states, including many that experience unemployment during the transition. However, nominal rigidities reduce the overall U.S. gains by around one fourth. In addition, there are seven states that experience welfare losses in the presence of downward nominal wage rigidity that would have experienced gains without it.
    Keywords: trade, unemployment, China shock, downward nominal wage rigidity
    JEL: F10 J20
    Date: 2022

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