nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2022‒12‒05
nineteen papers chosen by
Joseph Marchand
University of Alberta

  1. National Wage Setting By Jonathon Hazell; Christina Patterson; Heather Sarsons; Bledi Taska
  2. Technological change and the finance wage premium By Bertay, Ata Can; Carreño, José; Huizinga, Harry; Uras, Burak; Vellekoop, Nathanael
  3. Dual Returns to Experience By Jose Garcia-Louzao; Laura Hospido; Alessandro Ruggieri
  4. The Selection Effects of Part-Time Work: Experimental Evidence from a Large-Scale Recruitment Drive By Hyuncheol Bryant Kim; Hyunseob Kim; John Zhu
  5. Weather Conditions and Daily Commuting By Belloc, Ignacio; Gimenez-Nadal, J. Ignacio; Molina, José Alberto
  6. Trading Away Incentives By Stefano Colonnello; Giuliano Curatola; Shuo Xia
  7. Disinformation for Hire: Examining the Production of False COVID-19 Information By Alain Cohn; Jan Stoop; Hatim A. Rahman
  8. The Fundamental Surplus Revisited By Bingsong Wang
  9. Innovation and competitiveness: the regional dimension By Milene Simone Tessarin; Carlos Roberto Azzoni; ;
  10. Effects of the Earned Income Tax Credit for Childless Adults: A Regression Discontinuity Approach By Jonathan Meer; Joshua Witter
  11. Air Pollution and Entrepreneurship By Guo, Liwen; Cheng, Zhiming; Tani, Massimiliano; Cook, Sarah; Zhao, Jiaqi; Chen, Xi
  12. Subjective Performance Evaluation, Influence Activities, and Bureaucratic Work Behavior: Evidence from China By Alain de Janvry; Guojun He; Elisabeth Sadoulet; Shaoda Wang; Qiong Zhang
  13. Structural Change, Elite Capitalism, and the Emergence of Labor Emancipation By Boris Gershman; Quamrul H. Ashraf; Francesco Cinnirella; Oded Galor; Erik Hornung
  14. Decent Wage Floors in Europe: Does the Minimum Wage Directive Get It Right? By Haapanala, Henri; Marx, Ive; Parolin, Zachary
  15. Working from Home Around the World By Aksoy, Cevat Giray; Barrero, Jose Maria; Bloom, Nick; Davis, Steven J.; Dolls, Mathias; Zarate, Pablo
  16. Dynamic agglomeration effects of foreigners and natives – The role of experience in high-quality sectors, tasks and establishments By Niebuhr, Annekatrin; Peters, Jan Cornelius; Roth, Duncan
  17. The Economic Effects of Immigration Pardons: Evidence from Venezuelan Entrepreneurs By Dany Bahar; Bo Cowgill; Jorge Guzman
  18. Role of worker flows in the relationship between job offers and employment By Matsue, Toyoki
  19. A Spanner in the Works: Restricting Labor Mobility and the Inevitable Capital-Labor Substitution By Bharadwaj Kannan; Roberto Pinheiro; Harry Turtle

  1. By: Jonathon Hazell; Christina Patterson; Heather Sarsons; Bledi Taska
    Abstract: How do firms set wages across space? Using job-level vacancy data and a survey of HR managers, we show that 40-50% of a job’s posted wages are identical across locations within a firm. Moreover, nominal posted wages within the firm vary relatively little with local prices, a pattern we verify with other measures of job level wages. Using the co-movement of wage growth across establishments, we argue these patterns reflect national wage setting---a significant minority of firms choose to set the same nominal wage for a job across all their establishments, despite varying local labor market conditions.
    JEL: J3 J31
    Date: 2022–11
  2. By: Bertay, Ata Can; Carreño, José; Huizinga, Harry; Uras, Burak; Vellekoop, Nathanael
    Abstract: This paper utilizes a comprehensive worker-firm panel for the Netherlands to quantify the impact of ICT capital-skill complementarity on the finance wage premium after the Global Financial Crisis. We apply additive worker and firm fixed-effect models to account for unobserved worker- and firm-heterogeneity and show that firm fixed-effects correct for a downward bias in the estimated finance wage premium. Our results indicate a sizable finance wage premium for both fixed- and full-hourly wages. The complementarity between ICT capital spending and the share of high skill workers at the firm-level reduces the full-wage premium considerably and the fixed-wage premium almost entirely.
    Keywords: finance wage premium,worker-firm panels,skill-biased technological change
    JEL: G20 J24 J31 O33
    Date: 2022
  3. By: Jose Garcia-Louzao; Laura Hospido; Alessandro Ruggieri
    Abstract: In this paper we study how labor market duality affects human capital accumulation and wage trajectories of young workers. Using rich administrative data for Spain, we follow workers since their entry into the labor market to measure experience accumulated under different contractual arrangements and we estimate their wage returns. We document lower returns to experience accumulated in fixed-term contracts compared to permanent contracts and show that this difference is neither due to unobserved firm heterogeneity nor match quality. Instead, we provide evidence that the gap in returns is due to lower human capital accumulation while working under fixed-term contracts. In line with skill-learning complementarity, our results suggest that the widespread use of fixed-term work arrangements reduces skill acquisition of high-skilled workers, holding back life-cycle wage growth by up to 16 percentage points after 15 years since labor market entry.
    Keywords: labor market duality, human capital, earnings dynamics
    JEL: J30 J41 J63
    Date: 2022
  4. By: Hyuncheol Bryant Kim; Hyunseob Kim; John Zhu
    Abstract: We implement a field experiment to examine how part-time work attracts applicants with different quality and productivity levels than full-time work. In a large-scale recruitment drive for a data-entry position in Ethiopia, either a part-time or full-time job opportunity was randomly offered across villages. We find that the part-time work attracts a less qualified pool of applicants with a stronger preference for short work hours, who in turn exhibit lower productivity, all relative to the full-time work. Our preferred estimates show that this selection effect on productivity may explain up to half of the typical part-time wage penalty. A simple conceptual framework demonstrates that a lack of high quality potential applicants with a strong preference for short work hours could explain the experimental evidence. The results have implications for the selection effects of alternative work arrangements and for the gender pay gap.
    Keywords: part-time work; alternative work arrangements; self-selection bias; labor productivity; wage-hour relation
    JEL: J22 J24 O15 M51
    Date: 2022–10–25
  5. By: Belloc, Ignacio (University of Zaragoza); Gimenez-Nadal, J. Ignacio (University of Zaragoza); Molina, José Alberto (University of Zaragoza)
    Abstract: Climate change and global warming are problems that currently affect the daily lives of the world population and, to the extent that climate projections are less than optimistic, understanding how individuals respond to extreme weather conditions is essential for the correct design of public policies. One of the human behaviors that can be most affected by extreme weather conditions is that of personal travel, including commuting, an activity that is done daily by millions of workers worldwide. Within this framework, we estimate the effects of weather conditions on daily commuting and travel choices, by examining daily variations in weather conditions within counties in the US. To that end, we use time­use diary information from the American Time Use Survey 2003-2019 and daily weather information at the county level for a sample of US workers, finding significant relationships between daily weather conditions, commuting time, and travel choices. Rainy days, high temperatures, and snowfall are associated with a statistically significant lower proportion of commuting time done by public transit and walking, whereas the relationship is found to be positive for the proportion of commuting time by car. With additional analysis, we find that the greatest substitution from greener modes of transport towards the private car is concentrated on days with greater precipitation and higher temperatures. Finally, our results suggest adaptation to higher temperatures in war­mer places.
    Keywords: weather, commuting, green mobility, workers, American Time Use Survey
    JEL: R4 J22
    Date: 2022–10
  6. By: Stefano Colonnello (Department of Economics, University Of Venice CÃ Foscari; Halle Institute for Economic Research (IWH)); Giuliano Curatola (University of Siena); Shuo Xia (Leipzig University; Halle Institute for Economic Research (IWH))
    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 to a large extent 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: Executive Compensation, Equity Incentives, Insider Trading, Hedging, Dynamic Contracting
    JEL: G32 G34 J33 M12 M52
    Date: 2022
  7. By: Alain Cohn (University of Michigan); Jan Stoop (Erasmus University Rotterdam); Hatim A. Rahman (Northwestern University)
    Abstract: Misinformation is linked to increased social divisions and adverse health outcomes. While most research focuses on the spread of misinformation, we examine the production of misinformation intended to mislead (disinformation). Our field experiment (N=1,200) found, adjusting for circumstantial factors, 87% of workers in an online labor market completed a job requesting them to create a misleading COVID-19 graph. Viewing a disinformation graph from the experiment negatively affected people’s beliefs and behavioral responses to the COVID-19 pandemic, including increased vaccine hesitancy. Using a “wisdom-of-crowds” approach, we highlight how online labor markets can introduce features that may reduce the production of disinformation.
    Keywords: disinformation, field experiment, online labor markets, immoral work
    JEL: C93 D91 J22
    Date: 2022–11–20
  8. By: Bingsong Wang (Department of Economics, University of Sheffield, S1 4DT, UK)
    Abstract: To generate large responses of unemployment to productivity changes requires a high elasticity of the fundamental surplus with respect to productivity. When all deductions that enter the fundamental surplus are acyclical, and the fundamental surplus does not involve endogenous variables, then the elasticity of the fundamental surplus coincides with the inverse of the fundamental surplus fraction.
    Keywords: the fundamental surplus, search frictions, labor market volatility, real wage rigidity
    JEL: E24 E32 J31 J41 J63
    Date: 2022–11
  9. By: Milene Simone Tessarin; Carlos Roberto Azzoni; ;
    Abstract: This study explores the importance of labour pool and geographical concentration as essential factors that help shape pathways for innovation and influence the speed with which technological change can occur. To do so, we propose an approach based on human capital and the workers’ skills that contribute to innovation. Being able to capture this broader range of professionals is crucial to assess regional innovation in Less Developed Countries, such as Brazil and other Latin American countries, as their productive structure concentrates on lower technological industries and innovative activities not centred on R&D. We created a measure of innovative potential that can be used at different levels of regional disaggregation. We analyze 374 relevant Brazilian Labour Market Areas (LMA), employing data on occupations from the Annual Report of Social Information, from 2003 to 2018. Although innovative activities are heavily concentrated in a few regions, empirical evidence suggests that a shift has occurred since the early 2000s, with lagging regions making progress faster. Nonetheless, our results show that such convergence is still slight, given the distance between the leading and lagging regions’ innovative performance. Factors related to the region’s previous capacities, such as the stock of workers with innovative skills, manufacturing industry share, and the number of large firms have a positive association with innovative activity in a region. Although the convergence in the innovative potential among Brazilian regions, the movement is too slow to indicate a transformation of the country as a whole to levels similar to those of developed nations.
    Keywords: regional innovation, regional inequality, skills of workers, structural change
    JEL: O30 O33 R11 J24 L16
    Date: 2022–10
  10. By: Jonathan Meer; Joshua Witter
    Abstract: Most antipoverty policy in the United States focuses on families with children, but efforts to assist childless adults have gained traction in recent years. We examine the impact of the Earned Income Tax Credit on the labor force outcomes of childless adults using the age-25 eligibility discontinuity. We find no impacts on labor force participation and employment outcomes, which may be due to lack of information about the credit, lack of behavioral response due to its small size, or that childless adults already have very high labor force participation rates.
    JEL: H22 H24 J20
    Date: 2022–11
  11. By: Guo, Liwen; Cheng, Zhiming; Tani, Massimiliano; Cook, Sarah; Zhao, Jiaqi; Chen, Xi
    Abstract: We examine the causal effect of air pollution on an individual's propensity for entrepreneurship in China. Our preferred model, which employs an instrumental variable approach to address endogeneity arising from sorting into entrepreneurship and locational choices, suggests that exposure to higher intensity of air pollution lowers one's proclivity for entrepreneurship. We also find that industrial activity and self-efficacy mediate the relationship between air pollution and entrepreneurship. In addition, education and gender further moderate the relationship between air pollution and self-efficacy. In particular, air pollution negatively affects self-efficacy among the less-educated and females.
    Keywords: Air pollution,Entrepreneurship,China
    JEL: J24 L26 Q53
    Date: 2022
  12. By: Alain de Janvry; Guojun He; Elisabeth Sadoulet; Shaoda Wang; Qiong Zhang
    Abstract: Subjective performance evaluation is widely used by firms and governments to provide work incentives. However, delegating evaluation power to local leadership could induce influence activities: employees might devote too much effort to impressing/pleasing their evaluator, relative to working toward the goals of the organization itself. We conduct a large-scale randomized field experiment among Chinese local civil servants to study the existence and implications of influence activities. We find that civil servants do engage in evaluator-specific influence to affect evaluation outcomes, partly in the form of reallocating work efforts toward job tasks that are more important and observable to the evaluator. Importantly, we show that introducing uncertainty about the evaluator’s identity discourages evaluator-specific influence activities and improves bureaucratic work performance.
    JEL: D73 M12
    Date: 2022–11
  13. By: Boris Gershman; Quamrul H. Ashraf; Francesco Cinnirella; Oded Galor; Erik Hornung
    Abstract: This study argues that the decline of coercive labor institutions over the course of industrialization was partly driven by complementarity between physical capital and effective labor in manufacturing. Given that it is difficult to extract labor effort in care-intensive industrial tasks through monitoring and punishment, capital-owning elites ultimately chose to emancipate workers to induce their supply of effective labor and, thus, boost the return to physical capital. This mechanism is empirically examined in the context of serf emancipation in nineteenth-century Prussia. Exploiting a plausibly exogenous source of variation in proto-industrialization across Prussian regions, the analysis finds that, consistent with the proposed hypothesis, the initial abundance of elite-owned capital contributed to a higher intensity of subsequent serf emancipation and the elites’ willingness to accept emancipation in exchange for lower redemption payments.
    Keywords: Labor coercion, serfdom, emancipation, industrialization, capital accumulation, effective labor, nineteenth-century Prussia
    JEL: J24 J47 N13 N33 O14 O15 O43
    Date: 2022
  14. By: Haapanala, Henri (University of Antwerp); Marx, Ive (University of Antwerp); Parolin, Zachary (Bocconi University)
    Abstract: The Directive on Adequate Minimum Wages represents a watershed initiative adding substance to the EU's social dimension. It contains two ambitious objectives: establishing the minimum level of statutory minimum wages (SMWs) at 60% of the gross median wage, and increasing collective bargaining coverage (CBC) to at least 80% of workers. In this paper, we assess how minimum wages and collective bargaining affect low pay. Using a time series cross-section of EU-SILC for income years 2004-2019, we identify and assess the absolute and relative size of 'effective wage floors' for full-time employees in 30 countries. We specify multilevel, random effects within-between (REWB) regression models to assess the individual and joint effects of SMW and CBC on wage floors. Our results indicate that SMW and CBC both have distinct roles to play in establishing the effective wage floor. First, countries with a statutory minimum wage have a lower share of workers earning below 60% gross median wage than countries without one. Furthermore, higher rates of CBC are essential for pushing down the share of workers on below-decent pay. Countries without a SMW but with CBC above the 80% target value have roughly the same proportion of below-decent pay as SMW countries with CBC less than 30-40%. However, at higher rates of CBC, SMW countries are predicted to overtake non-SMW countries on this measure. A hypothetical SMW country meeting the target value of 80% CBC is predicted to have less than 6.5% of full-time employees earning below-decent pay.
    Keywords: minimum wage, collective bargaining, European Union, multilevel analysis
    JEL: J38 E24 J50 C23
    Date: 2022–10
  15. By: Aksoy, Cevat Giray; Barrero, Jose Maria (Instituto Tecnologico Autonomo de Mexico); Bloom, Nick; Davis, Steven J.; Dolls, Mathias; Zarate, Pablo
    Abstract: The pandemic triggered a large, lasting shift to work from home (WFH). To study this shift, we survey full-time workers who finished primary school in 27 countries as of mid 2021 and early 2022. Our cross-country comparisons control for age, gender, education, and industry and treat the U.S. mean as the baseline. We find, first, that WFH averages 1.5 days per week in our sample, ranging widely across countries. Second, employers plan an average of 0.7 WFH days per week after the pandemic, but workers want 1.7 days. Third, employees value the option to WFH 2-3 days per week at 5 percent of pay, on average, with higher valuations for women, people with children and those with longer commutes. Fourth, most employees were favorably surprised by their WFH productivity during the pandemic. Fifth, looking across individuals, employer plans for WFH levels after the pandemic rise strongly with WFH productivity surprises during the pandemic. Sixth, looking across countries, planned WFH levels rise with the cumulative stringency of government-mandated lockdowns during the pandemic. We draw on these results to explain the big shift to WFH and to consider some implications for workers, organization, cities, and the pace of innovation.
    Date: 2022–09–13
  16. By: Niebuhr, Annekatrin (Institute for Employment Research (IAB), Nuremberg, Germany ; Univ. Kiel); Peters, Jan Cornelius (Thünen Institute); Roth, Duncan (Institute for Employment Research (IAB), Nuremberg, Germany)
    Abstract: "This paper analyzes how dynamic agglomeration effects differ between foreign and native workers using administrative data on individual employment biographies. According to our results, both groups benefit, on average, equally from gathering work experience in large labor markets. The exception are low-skilled foreign workers, who receive a lower premium for big city experience than low-skilled natives. Providing new evidence on the sources of dynamic agglomeration effects, we show that this difference disappears once we consider the sectors, tasks and establishments, in which foreign and native workers gather experience. More generally, our results indicate that, on average, around 50% of the return of an additional year of experience gained in the densest regions can be ascribed to the acquisition of experience in higher-quality jobs in large cities." (Author's abstract, IAB-Doku) ((en))
    Keywords: IAB-Open-Access-Publikation ; Integrierte Erwerbsbiografien
    JEL: J31 J61 R12 R23
    Date: 2022–11–14
  17. By: Dany Bahar; Bo Cowgill; Jorge Guzman
    Abstract: This paper shows that providing undocumented immigrants with an immigration pardon, or amnesty, increases their economic activity in the form of higher entrepreneurship. Using administrative census data linked to the complete formal business registry, we study a 2018 policy shift in Colombia that made nearly half a million Venezuelan undocumented migrants eligible for a pardon. Our identification uses quasi-random variation in the amount of time available to get the pardon, introducing a novel regression discontinuity approach to study this policy. Receiving the pardon has small initial effects but raises formal firm formation to close to parity with native Colombians by 2022. This impact is concentrated on individuals active in the labor force, and on sole proprietorships rather than sociedades (limited liability entities). The new firms created include both employer and non-employer firms and are relatively low on assets. In panel data specifications, the effect of the pardon on firm formation is twice the effect of migration. Our heterogeneous effects suggest a mechanism whereby legalization induces greater investments of time in developing new firms.
    JEL: J26 K37 L26
    Date: 2022–11
  18. By: Matsue, Toyoki
    Abstract: This study investigates the mechanism determining changes in job offers and analyzes the role of worker flows in the relationship between job offers and employment. It applies a queueing system to dynamic general equilibrium models and analyzes economic fluctuations. The queueing system helps in considering the relationship between job offers and employment and changes in job offers in response to shocks. The numerical simulations indicate that worker flows influence changes in job offers in response to a productivity shock. Although employment fluctuations remain constant, changes in job offers amplify when fewer workers join and/or more workers leave the firm, whereas they decrease when more workers join and/or fewer workers leave. The shock responses of other variables in each model are in line with the reactions of the standard dynamic general equilibrium models. These findings provide important insights into labor market dynamics.
    Keywords: Queueing system; Job offer; Employment fluctuation; Economic fluctuation; Efficiency wage
    JEL: E24 E32 J20 J33
    Date: 2022–11–09
  19. By: Bharadwaj Kannan; Roberto Pinheiro; Harry Turtle
    Abstract: We model an environment with overlapping generations of labor to show that policies restricting labor mobility increase a firm's monopsony power and labor turnover costs. Subsequently, firms increase capital expenditure, altering their optimal capital-labor ratio. We confirm this by exploiting the statewide adoption of the inevitable disclosure doctrine (IDD), a law intended to protect trade secrets by restricting labor mobility. Following an IDD adoption, local firms increase capital expenditure (capital-labor ratio) by 3.5 percent (5.5 percent). This result is magnified for firms with greater human capital intensity. Finally, IDD adoptions do not spur investment in either R&D or growth options as intended.
    Keywords: Labor Mobility; Capital-Labor Ratio; Inevitable Disclosure Doctrine
    JEL: G31 J42
    Date: 2022–11–08

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