nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2022‒11‒28
nineteen papers chosen by
Joseph Marchand
University of Alberta

  1. The Productivity of Professions: Evidence from the Emergency Department By David C. Chan Jr; Yiqun Chen
  2. AI, Skill, and Productivity: The Case of Taxi Drivers By Kyogo Kanazawa; Daiji Kawaguchi; Hitoshi Shigeoka; Yasutora Watanabe
  3. Instrumental Variables with Unordered Treatments: Theory and Evidence from Returns to Fields of Study By Eskil Heinesen; Christian Hvid; Lars Johannessen Kirkebøen; Edwin Leuven; Magne Mogstad
  4. The Short-Term Labor Market Impact of Venezuelan Immigration in Peru By Celia P. Vera; Bruno Jiménez
  5. "The Double Dividend of Training" - Labor Market Effects of Work-Related Continuous Education in Switzerland By Stefan Denzler; Jens Ruhose; Stefan C. Wolter
  6. The Effect of the COVID-19 Pandemic Recession on Less Educated Women's Human Capital: Some Projections By Mark M. Drozd; Robert A. Moffitt; Xinyu Zhao
  7. Opening the Black Box: Task and Skill Mix and Productivity Dispersion By G. Jacob Blackwood; Cindy Cunningham; Matthew Dey; Lucia S. Foster; Cheryl Grim; John C. Haltiwanger; Rachel L. Nesbit; Sabrina Wulff Pabilonia; Jay Stewart; Cody Tuttle; Zoltan Wolf
  8. Is Affirmative Action in Employment Still Effective in the 21st Century? By Amano-Patiño, N.; Aramburu, J.; Contractor, Z.
  9. Coordinated Firm-Level Work Processes and Macroeconomic Resilience By Moritz Kuhn; Jinfeng Luo; Iourii Manovskii; Xincheng Qiu
  10. Firm Consolidation and Labor Market Outcomes By Sabien Dobbelaere; Grace McCormack; Daniel Prinz; Sándor Sóvágó
  11. Oligopsony Power and Factor-Biased Technology Adoption By Michael Rubens
  12. The Missing Middle Managers: Labor Costs, Firm Structure, and Development By Jonas Hjort; Hannes Malmberg; Todd Schoellman
  13. Understanding the effect of cancer incidence on labour productivity in the UK: An empirical approach with a health augmented production function By Bradley Pycroft; Aleksandar Vasilev
  14. The Effects of Financial Aid on Graduation and Labor Market Outcomes: New Evidence from Matched Education-Labor Data By Veronica Rattini
  15. The Impact of Joint versus Separate Prediction Mode on Forecasting Accuracy By Alex Imas; Minah H. Jung; Silvia Saccardo; Joachim Vosgerau
  16. Robots, Meaning, and Self-Determination By Nikolova, Milena; Cnossen, Femke; Nikolaev. Boris
  17. Gender gaps in STEM occupations in Costa Rica, El Salvador and Mexico By David Cuberes; Florencia Saravia; Marc Teignier
  18. The Role of Within-Occupation Task Change in Wage Development By Bachmann, Ronald; Demir, Gökay; Green, Colin; Uhlendorff, Arne
  19. Willingness to volunteer among remote workers is insensitive to the team size By Hillenbrand, Adrian; Werner, Tobias; Winter, Fabian

  1. By: David C. Chan Jr; Yiqun Chen
    Abstract: Professions play a key role in determining the division of labor and the returns to skilled work. This paper studies the productivity difference between physicians and nurse practitioners (NPs), two health care professions performing overlapping tasks but with stark differences in background, training, and pay. Using data from the Veterans Health Administration and quasi-experimental variation in the patient probability of being treated by physicians versus NPs in the emergency department, we find that, compared to physicians, NPs significantly increase resource utilization but achieve worse patient outcomes. We find evidence suggesting mechanisms relating to lower human capital among NPs relative to physicians and worker-task assignment responding to the lower skill of NPs. Counterfactual analysis suggests a net increase in medical costs with NPs, even when accounting for NPs’ wages that are half as much as physicians’. Despite large productivity differences between professions, we find even larger productivity differences within professions and substantial productivity overlap between professions. Yet there is little overlap in wages between NPs and physicians and, within professions, no significant correlation between productivity and wages.
    JEL: I11 I18 J24 J44 M53
    Date: 2022–10
  2. By: Kyogo Kanazawa; Daiji Kawaguchi; Hitoshi Shigeoka; Yasutora Watanabe
    Abstract: We examine the impact of Artificial Intelligence (AI) on productivity in the context of taxi drivers. The AI we study assists drivers with finding customers by suggesting routes along which the demand is predicted to be high. We find that AI improves drivers’ productivity by shortening the cruising time, and such gain is accrued only to low-skilled drivers, narrowing the productivity gap between high- and low-skilled drivers by 14%. The result indicates that AI's impact on human labor is more nuanced and complex than a job displacement story, which was the primary focus of existing studies.
    JEL: J22 J24 L92 R41
    Date: 2022–10
  3. By: Eskil Heinesen; Christian Hvid; Lars Johannessen Kirkebøen; Edwin Leuven; Magne Mogstad
    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.
    JEL: C31 J24 J31
    Date: 2022–10
  4. By: Celia P. Vera (Universidad de Piura); Bruno Jiménez (Princeton University, CEDLAS & IIE-UNLP)
    Abstract: Peru is the second-largest recipient of Venezuelans worldwide. We combine newly available data on Venezuelans living in Peru and the Peruvian Household Survey to assess the impact of Venezuelan migration on natives’ wages and employment. The initial regression analysis exploits the variation in supply shifts across education-experience groups over time. It indicates that immigration in Peru had no adverse impact on native wages. However, the paper highlights that in Peru immigrants and natives with similar education and experience are likely to work in different occupations. The subsequent analysis based on occupational clustering confirms the null effect on wages and indicates that a 20% increase in immigrants decreases formal employment by 6%. We do not find evidence for changes in employment composition toward informality so that migration operates through the extensive margin of employment. We report evidence in favor of immigrants being a close substitute to the least productive natives, suggesting that firms substitute native formal labor for low-cost immigrant informal labor.
    JEL: J24 J31 J46
    Date: 2022–10
  5. By: Stefan Denzler; Jens Ruhose; Stefan C. Wolter
    Abstract: This paper presents the first longitudinal estimates of the effect of work-related training on labor market outcomes in Switzerland. Using a novel dataset that links official census data on adult education to longitudinal register data on labor 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 two years after the treatment. However, the effects are heterogeneous as to gender, age, education, and regional labor market context. The gains are highest for middle-aged men with formal vocational education working in either depressed or booming labor markets.
    Keywords: continuous education, wages, unemployment, entropy balancing, Switzerland
    JEL: I21 I26 J24 M53
    Date: 2022
  6. By: Mark M. Drozd; Robert A. Moffitt; Xinyu Zhao
    Abstract: The recession induced by the COVID-19 pandemic resulted in major declines in employment of women, both from the demand side as firms reduced employment and from the supply side resulting from school closures and the closing of many child care facilities. We provide projections of possible impacts of this reduction on less-educated women's future human capital framed within the traditional Mincerian model that implies that wage growth falls if a recession reduces the growth of work experience. Using a modified form of that model, we estimate the impact of recession-induced loss of work experience on wages on pre-COVID data and project impacts following COVID. We project that wage losses one year out from 2020 are relatively modest on average but larger for married women than for unmarried women and for those working in COVID-impacted industries. For married women, it is more severe for younger married mothers, for younger and older married childless women, and for married mothers with older children. School closures are also important for married women with school-age children and increase negative wage impacts by 50 percent. An increase in part-year work projected to occur during the pandemic increases the size of human capital losses.
    JEL: J16 J24
    Date: 2022–11
  7. By: G. Jacob Blackwood; Cindy Cunningham; Matthew Dey; Lucia S. Foster; Cheryl Grim; John C. Haltiwanger; Rachel L. Nesbit; Sabrina Wulff Pabilonia; Jay Stewart; Cody Tuttle; Zoltan Wolf
    Abstract: An important gap in most empirical studies of establishment-level productivity is the limited information about workers’ characteristics and their tasks. Skill-adjusted labor input measures have been shown to be important for aggregate productivity measurement. Moreover, the theoretical literature on differences in production technologies across businesses increasingly emphasizes the task content of production. Our ultimate objective is to open this black box of tasks and skills at the establishment-level by combining establishment-level data on occupations from the Bureau of Labor Statistics (BLS) with a restricted-access establishment-level productivity dataset created by the BLS-Census Bureau Collaborative Micro-productivity Project. We take a first step toward this objective by exploring the conceptual, specification, and measurement issues to be confronted. We provide suggestive empirical analysis of the relationship between within-industry dispersion in productivity and tasks and skills. We find that within-industry productivity dispersion is strongly positively related to within-industry task/skill dispersion.
    JEL: C81 E23 O33
    Date: 2022–11
  8. By: Amano-Patiño, N.; Aramburu, J.; Contractor, Z.
    Abstract: We study Executive Order 11246, an employment-based affirmative action policy targeted at firms holding contracts with the federal government. We find this policy to be ineffective in the 21st century, contrary to the positive effects found in the late 1900s (Miller, 2017). Our novel dataset combines data on federal contract acquisition and enforcement with US linked employer-employee Census data 2000–2014. We employ an event study around firms’ acquiring a contract, based on Miller (2017), and find the policy had no effect on employment shares or on hiring, for any minority group. Next, we isolate the impact of the affirmative action plan, which is EO 11246’s preeminent requirement that applies to firms with contracts over $50,000. Leveraging variation from this threshold in an event study and regression discontinuity design, we find similarly null effects. Last, we show that even randomized audits are not effective, suggesting weak enforcement. Our results highlight the importance of the recent budget increase for the enforcement agency, as well as recent policies enacted to improve compliance.
    Keywords: Racial discrimination, affirmative action regulation, unemployment, earnings differentials
    JEL: J15 J23 J31 J71 J78 K31
    Date: 2022–11–01
  9. By: Moritz Kuhn (University of Bonn, Department of Economics); Jinfeng Luo (University of Bonn, Department of Economics); Iourii Manovskii (University of Pennsylvania, Department of Economics); Xincheng Qiu (University of Pennsylvania, Department of Economics)
    Abstract: The production processes at many firms rely on a highly choreographed and interdependent network of workers performing specialized jobs. We designed and implemented a targeted employer survey to measure the extent of coordination in work processes. We link this firm-level coordination measure to administrative data and find that firms with a more coordinated work process are more productive, pay higher wages, and experience lower worker turnover. Yet, these firms suffer more severe negative consequences from worker absences and adopt various strategies to mitigate such risk, the reliance on which we document. While the standard unemployment insurance policy pays benefits to workers who lose their jobs, the short-time work policy widely adopted in Germany compensates workers who remain employed with reduced hours for the associated loss of earnings. This policy can benefit employers with a more coordinated production process because they can lower the scale of production by reducing hours while keeping all workers needed for the production process employed, increasing the resilience of these employers to large idiosyncratic and aggregate shocks.
    Keywords: Labor markets, Coordination, Economic resilience, Work process, Covid-19
    JEL: E23 E24 J24 J65
    Date: 2022–11
  10. By: Sabien Dobbelaere (Vrije Universiteit Amsterdam); Grace McCormack (University of Southern California); Daniel Prinz (World Bank); Sándor Sóvágó (University of Groningen)
    Abstract: Using rich administrative data from the Netherlands, we study the consequences of firm consolidation for workers. For workers at acquired firms, takeovers are associated with a 8.5% drop in employment at the consolidated firm and a 2.6% drop in total labor income. These effects are persistent even four years later. We show that the primary mechanism for this job loss is labor restructuring at consolidating firms. Specifically, workers with higher-than-expected pay relative to their human capital and workers with skills that are likely already present at acquirers are less likely to be retained.
    Keywords: Takeovers, labor market outcomes, labor restructuring
    JEL: G34 J2 J3 M51
    Date: 2022–11–13
  11. By: Michael Rubens
    Abstract: I show that buyer power of firms could either increase or decrease their technology adoption, depending on the direction of technical change and on which input markets are imperfectly competitive. I examine this relationship empirically in a setting that features both concentrated labor markets and a large technology shock: the introduction of mechanical cutters in the 19th century Illinois coal mining industry. Using a model of production and labor supply which is estimated with mine-level data, I find that oligopsony power over skilled miners reduced the usage of cutting machines, an unskill-biased technology. However, it would have increased the usage of counterfactual skill-biased and Hicks-neutral technologies.
    JEL: J42 L11 L13 N52
    Date: 2022–10
  12. By: Jonas Hjort; Hannes Malmberg; Todd Schoellman
    Abstract: This paper shows that large, multi-establishment business enterprises face a high cost of middle management in poor countries and that this cost inhibits the growth of the modern sector. We provide new empirical evidence using a database covering compensation for 300,000 middle managers working at modern firms in 146 countries. We estimate that the elasticity of real management costs with respect to real GDP per worker is 0.1. We quantify the importance of this finding using a calibrated appropriate technology model where firms choose whether to adopt the management-intensive modern business structure. Lower management costs in developing countries would increase the revenue share of the modern sector by 10-20 percentage points
    JEL: J3 M11 O11 O4
    Date: 2022–10
  13. By: Bradley Pycroft; Aleksandar Vasilev
    Abstract: This study represents a new way of looking at health, by investigating the effect of aggregate cancer incidence rates on labour productivity, using a macroeconomic methodology. The health of the labour force is a key determinant of labour productivity, with poor health comes both physical and mental stresses that corrode the productive capacity of workers. Within this study, cancer was selected as an approximation of labour force health, given its ability to capture a range of lifestyle choices. Workers afflicted by cancer often face three choices: continue working, temporarily/permanently leave employment or retire early – all resulting in productivity loss. Moreover, the effect on productivity may not just be felt by the patient but also their family. This creates a negative externality, the result of which is additional productivity loss. The study used an autoregressive distributed lag (ARDL) model to assess the impact of cancer rates in the short-run and long-run. The results were clear, with cancer rates having a significant short-run one year lagged effect on labour productivity. With a 10% short-run lagged increase in cancer rates, leading to a loss of -$1711 in labour productivity per worker – using 2010 GDP per worker. In the long-run, the effect was positive suggesting cancer does not impact long-run economic growth. This research offers a new insight into the mechanics of health within the environment of macroeconomics. With this study potentially unlocking a new avenue of productivity policy framework, aimed at health improvement rather than more traditional approaches involving training and technological advancement.
    Keywords: Labour Productivity, Health Economics, Cancer, UK Productivity, Productivity Growth
    JEL: E24 E32 I10 J24
    Date: 2022–09–12
  14. By: Veronica Rattini
    Abstract: Financial aid decreases the cost of acquiring additional education. By using Italian administrative and survey data on financial aid recipients and exploiting sharp discontinuities in the amount of aid received, this paper identifies the causal effect of aid generosity on college performance and labor market outcomes. The results show that students with a higher cost of college earn more credits each year than those receiving higher financial aid. This gap generates a significant difference in the overall graduation time. No differences emerge in the GPA level or in the probability of working during college. After graduation, lower-aid recipients have a similar probability of continuing to study and of working after college as higher-aid beneficiaries. However, they secure a better job match in terms of working hours and payment but also in terms of skills matching.
    Keywords: human capital, financial aid, labor market outcomes, regression discontinuity design
    JEL: H75 I22 I26 J24
    Date: 2022
  15. By: Alex Imas; Minah H. Jung; Silvia Saccardo; Joachim Vosgerau
    Abstract: Forecasters predicting how people change their behavior in response to a treatment or intervention often consider a set of alternatives. In contrast, those who are treated are typically exposed to only one of the treatment alternatives. For example, managers selecting a wage schedule consider a set of alternative wages while employees are hired at a given rate. We show that forecasts made in joint-prediction mode—which considers a set of alternatives—generate predictions that expect substantially larger behavioral responses than those made in separate-prediction mode—which considers the response to only one treatment realization in isolation. Results show the latter to be more accurate in matching people’s actual responses to interventions and treatment changes. We present applications to managerial decision-making and forecasting of scientific results.
    JEL: D0 D9 D90
    Date: 2022–10
  16. By: Nikolova, Milena; Cnossen, Femke; Nikolaev. Boris
    Abstract: We are the first to examine the impact of robotization on work meaningfulness and autonomy, competence, and relatedness, which are key for motivation and human flourishing at work. Using worker-level data from 13 industries in 20 European countries and OLS and instrumental variables estimations, we find that industry-level robotization harms all work quality aspects except competence. We also examine the moderating role of routine and cognitive tasks, skills and education, and age and gender. While we do not find evidence of moderation concerning work meaningfulness in any of our models, noteworthy differences emerge for autonomy. For instance, workers with repetitive and monotonous tasks drive the negative effects of robotization on autonomy, while social tasks and working with computers - a tool that provides worker independence - help workers derive autonomy and competence in industries and jobs that adopt robots. In addition, robotization increases the competence perceptions of men. Our results highlight that by deteriorating the opportunities to derive meaning and self-determination out of work, robotization will impact the present and the future of work above and beyond its consequences for employment and wages.
    Keywords: work meaningfulness,self-determination theory,robotization,automation
    JEL: J01 J30 J32 J81 I30 I31 M50
    Date: 2022
  17. By: David Cuberes (Clark University); Florencia Saravia (Universitat de Barcelona); Marc Teignier (Universitat de Barcelona and BEAT)
    Abstract: This paper documents the existence of significant gender gaps in STEM occupations in Costa Rica, El Salvador, and Mexico and estimates the aggregate costs associated with these gaps in Mexico. For Mexico we calibrate and simulate a version of the general equilibrium occupational choice model of Hsieh et al. (2019) to estimate the output losses associated with these differences since 1992. We find that if barriers in STEM occupations were eliminated aggregate output would have been between 1% and 10% larger, depending on the year. If female-specific social norms were also eliminated, the rise in aggregate output would be between 1.4% and 14%. For comparison purposes, we also compute the gains of eliminating all the distortions in high-skilled occupations as well as in all occupations. We find that aggregate output would rise between 16.5% and 3.6% in the former group of occupations and between 36.7% and 12% in the latter.
    Keywords: Talent misallocation, STEM occupations, aggregate productivity.
    JEL: E2 J21 J24 O40
    Date: 2022
  18. By: Bachmann, Ronald; Demir, Gökay; Green, Colin; Uhlendorff, Arne
    JEL: J31
    Date: 2022
  19. By: Hillenbrand, Adrian; Werner, Tobias; Winter, Fabian
    Abstract: Volunteering is a widespread allocation mechanism in the workplace. It emerges naturally in software development or the generation of online knowledge platforms. Using a field experiment with more than 2000 workers, we study the effect of team size on volunteering in an online labor market. In contrast to our theoretical predictions and previous research, we find no effect of team size on volunteering although workers react to free riding incentives. We replicate the results and provide further robustness checks. Eliciting workers' beliefs about their co-workers' volunteering reveals conditional volunteering as the primary driver of our results.
    Keywords: volunteering,"volunteer's dilemma",remote work,team size
    JEL: C72 C93 H41 J4
    Date: 2022

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