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on Labor Markets - Supply, Demand, and Wages |
| By: | Bertoni, Marco (University of Padova); Brunello, Giorgio (University of Padova); Da Re, Filippo (University of Padova) |
| Abstract: | We investigate the effect of postponing minimum retirement age on middle-aged workers' depression. Using pension reforms in several European countries and data from the SHARE survey, we find that depression increases with a longer work horizon, but only among workers employed in occupations with a relatively high risk of automation. We rule out alternatives to this risk, including job strenuousness, education, gender, and the degree of routinization of occupations. We explain our results with the higher job insecurity associated with occupations more exposed to automation. |
| Keywords: | pension reforms, depression, automation, SHARE |
| JEL: | I1 J24 J26 O33 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15700&r=lma |
| By: | Schultheiss, Tobias (University of Zurich); Pfister, Curdin (University of Zurich); Gnehm, Ann-Sophie (University of Zurich); Backes-Gellner, Uschi (University of Zurich) |
| Abstract: | We examine how education expansions affect the job opportunities for workers with and without the new education. To identify causal effects, we exploit a quasi-random establishment of Universities of Applied Sciences (UASs), bachelor-granting three-year colleges that teach and conduct applied research. By applying machine-learning methods to job advertisement data, we analyze job content before and after the education expansion. We find that, in regions with the newly established UASs, not only job descriptions of the new UAS graduates but also job descriptions of workers without this degree (i.e., middle-skilled workers with vocational training) contain more high-skill job content. This upskilling in job content is driven by an increase in high-skill R&Drelated tasks and linked to employment and wage gains. The task spillovers likely occur because UAS graduates with applied research skills build a bridge between middle-skilled workers and traditional university graduates, facilitating the integration of the former into R&D-related tasks. |
| Keywords: | educational expansion, worker demand, upskilling, spillover effects, vocational training |
| JEL: | I23 J23 J24 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15687&r=lma |
| By: | Koomen, Miriam (Swiss National Bank); Backes-Gellner, Uschi (University of Zurich) |
| Abstract: | We study the role of occupational tasks as drivers of West German wage inequality. We match administrative wage data with longitudinal task data, which allows us to account for within-occupation changes in task content over time. We run RIF regression-based decompositions to quantify the contribution of changes in the returns to tasks to overall changes in the wage distribution from 1978 to 2006. We find that changes in the returns to tasks explain up to half of the increase in wage inequality since the 1990s, both at the top and the bottom of the wage distribution. Specifically, abstract tasks drive the upper wage gap, while interactive and routine tasks drive the lower wage gap. Importantly, we find low-wage occupations to have the highest routine task intensity. The association between occupational tasks and West German wage inequality is thus both stronger and different than prior research has found. |
| Keywords: | wage inequality, skills, tasks, routine-biased technical change, decomposition analysis, RIF regression |
| JEL: | C55 D63 E24 J31 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15702&r=lma |
| By: | Puggioni Daniela; Calderón Mariana; Cebreros Alfonso; Fernández León; Inguanzo José A.; Jaume David |
| Abstract: | We characterize the salient features of the distribution of earnings and earnings changes of formal workers in Mexico using social security records for the period 2005-2019. We find strong evidence of deviations from normality of these distributions. Comparing the results obtained with administrative data and household survey data suggests that this latter source of information is inadequate to fully capture the evolution of inequality and the properties of earnings changes. We also study the impact of transitions out of and back into formal employment on wages earned in the formal sector and the effect of early exposure to informality on future earnings. We document that workers who exit formal employment experience a significant wage penalty upon re-entry and that having the first job in the informal sector has a negative and significant impact on future earnings. |
| Keywords: | Earnings dynamics;higher-order earnings risk;inequality;worker transitions;informal labor markets |
| JEL: | E24 J24 J31 J46 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdm:wpaper:2022-14&r=lma |
| By: | Hirsch, Boris (Leuphana University Lüneburg); Jahn, Elke J. (University of Bayreuth); Manning, Alan (London School of Economics); Oberfichtner, Michael (Institute for Employment Research (IAB), Nuremberg) |
| Abstract: | One of the factors likely to affect the market power of employers is the sensitivity of the flow of recruits to the offered wage, but there is very little research on this. This paper presents a methodology for estimating the wage elasticity of recruitment and applies it to German data. Our estimates of the wage elasticity of recruitment are about 1.4. We also report evidence that high-wage employers are more selective in hiring, in which case the relevant recruitment elasticity should be higher, about 2.2. Together with prior estimates of the quit elasticity these results imply that wages are 72–77% of the marginal product of labour. Further, we find lower elasticities for recruits hired from non-employment as well as for women, non-German nationals, non-prime-age workers, less skilled workers, and workers with less complex jobs. |
| Keywords: | monopsony, imperfect labour markets, wage elasticity of recruitment |
| JEL: | J42 J31 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15675&r=lma |
| By: | Eggenberger, Christian (University of Zurich); Backes-Gellner, Uschi (University of Zurich) |
| Abstract: | This paper examines how workers' earnings change after involuntary job separations depending on the workers' acquired IT skills and the specificity of their occupational training. We categorize workers' occupational skill bundles along two independent dimensions. First, we distinguish between skill bundles that are more specific or less specific compared to the skill bundles needed in the overall labor market. Second, as digitalization becomes ever more important, we distinguish between skill bundles that contain two different types of IT skills, generic or expert IT skills. We expect that after involuntary separations, these different types of IT skills can have opposing effects, either reducing or amplifying earnings losses of workers with specific skill bundles. We find clearly opposing results for workers in specific occupations – but not in general occupations: Having more generic IT skills is positively correlated with earnings after involuntary separations, whereas more expert IT skills is negatively correlated. |
| Keywords: | IT skills, human capital specificity, vocational education and training |
| JEL: | J24 J63 M53 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15694&r=lma |
| By: | Vasily Astrov (The Vienna Institute for International Economic Studies, wiiw); Richard Grieveson (The Vienna Institute for International Economic Studies, wiiw); Doris Hanzl-Weiss (The Vienna Institute for International Economic Studies, wiiw); Sebastian Leitner (The Vienna Institute for International Economic Studies, wiiw); Isilda Mara (The Vienna Institute for International Economic Studies, wiiw); Hermine Vidovic (The Vienna Institute for International Economic Studies, wiiw); Zuzana Zavarská (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | The EU member states in Central and Eastern Europe (EU-CEE) have been experiencing increasing labour shortages, which only briefly subsided in the wake of the COVID-19 pandemic. Ongoing demographic decline suggests that labour shortages will only get stronger over time. As a result, the bargaining power of labour has increased, wages have been generally rising ahead of labour productivity, and industrial action (strikes) – the level of which has remained low in recent decades – has emerged in some instances. In the face of labour and skill shortages, people have been investing in education. The share of employees with tertiary education has increased, and vocational training has gained in importance, although active labour market policies have been used only selectively. Employers have increasingly been investing in fixed assets, especially in manufacturing, and the degree of robotisation has risen strongly. Despite domestic concerns that automation would generate massive job losses, our findings suggest that capital deepening has taken place faster where labour was in higher demand. Thus, labour was not substituted with capital, but rather the complementary effect prevailed. Employment actually increased in EU-CEE over the past two decades – despite the shrinking working-age population. Employers could hire not only the formerly unemployed, but also the formerly inactive, and used the relaxed immigration policies to attract foreign workers, especially from Ukraine and the Western Balkans. Czechia, Hungary, Slovenia and Slovakia and most recently Poland have become net receivers of migrants, while in Bulgaria immigration largely compensates for the natives who go abroad. However, immigration from non-European countries as a general solution to the problem of labour shortages in the region is highly problematic in the current domestic political context. Overall, both our findings for the EU-CEE region over recent years and the experience of Western Europe during the ‘golden age’ (1950-1973) suggest that labour shortages are not in themselves an obstacle to rapid structural change and income growth. However, for such an economic model to be sustainable, more active government policies will be needed, such as greater public investment in education and training, higher minimum wages in order to encourage automation, and more extensive welfare networks in order to deal with the possible negative short-run side-effects of automation. |
| Keywords: | labour shortages, trade unions, migration policy, active labour market policy, investment, vocational training, ‘golden age’, populism |
| JEL: | J21 J23 J24 J31 J52 J61 N14 N34 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:wii:rpaper:rr:463&r=lma |
| By: | Kanazawa, Kyogo (University of Tokyo); Kawaguchi, Daiji (University of Tokyo); Shigeoka, Hitoshi (Simon Fraser University); Watanabe, Yasutora (University of Tokyo) |
| Abstract: | We examine the impact of Articial 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. |
| Keywords: | artificial intelligence, skill, productivity, taxi-drivers, prediction, demand forecasting, machine learning |
| JEL: | J22 J24 L92 R41 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15677&r=lma |
| By: | Aleksandra Majchrowska (University of Lodz, Chair of Macroeconomics); Paweł Strawiński (University of Warsaw, Faculty of Economic Sciences) |
| Abstract: | We explain the variations in the employment effects with respect to minimum wage changes among different groups of workers. Prior analyses considered only two dimensions, investigating employment effects over time across groups of workers or regions. We propose a multidimensional panel data approach to simultaneously analyze the heterogeneous employment effects of minimum wage changes across age groups, economic sectors, and regions over time. Latent heterogeneities in regional employment reactions are discovered, indicating that the employment effect in the regional labor market is the result of a combination of specific labor market features related to the composition of workers and employers. |
| Keywords: | Employment elasticity, minimum wage, regional labor markets, latent heterogeneities, intra-regional differences, Poland |
| JEL: | R23 J21 J31 J38 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2022-18&r=lma |
| By: | Saltiel, Fernando (McGill University); Tuttle, Cody (University of Texas at Austin) |
| Abstract: | We show that the quality of police hires varies over the business cycle. Officers hired when the unemployment rate is high have fewer complaints, disciplines, and are less likely to be fired than officers hired when the unemployment rate is low. Effects are larger for younger workers who have weaker outside options in recessions. We find that the size and quality of the applicant pool increases in high unemployment years–more people take entry exams and a smaller fraction fail the exam. Our findings shed light on how outside options affect police hires and speak to policy questions about police recruitment. |
| Keywords: | police hiring, police quality, public sector labor markets, outside options |
| JEL: | H75 J24 J33 J45 K42 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15665&r=lma |
| By: | Hiesinger, Karolin (Institute for Employment Research (IAB), Nuremberg, Germany) |
| Abstract: | "This paper analyzes whether financial disincentives affect firm demand for disabled workers. In Germany, firms must pay a noncompliance fine if they do not meet their legal quota for disabled workers. I exploit a threshold in this quota: Firms with fewer than 40 employees are required to employ one disabled worker, whereas firms with 40 or more employees must employ two disabled workers. Using administrative firm data, my results suggest that firms respond partially to the threshold and employ 0.388 more disabled workers when they are located just above the threshold. The effect remains positive after correcting for bunching behavior." (Author's abstract, IAB-Doku) ((en)) |
| Keywords: | IAB-Open-Access-Publikation |
| JEL: | J15 J21 J23 J71 J78 |
| Date: | 2022–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:202225&r=lma |
| By: | Van Borm, Hannah (Ghent University); Lippens, Louis (Ghent University); Baert, Stijn (Ghent University) |
| 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 various race-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 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15707&r=lma |
| By: | Dobbelaere, Sabien (Vrije Universiteit Amsterdam); McCormack, Grace (University of Southern California); Prinz, Daniel (World Bank); Sovago, Sandor (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 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15724&r=lma |
| By: | Jose Garcia-Louzao; Linas Tarasonis |
| Abstract: | This paper evaluates the worker-level effects of a historically large and permanent increase in the minimum wage in Lithuania. Our identification strategy leverages variation in workers’ exposure to the new minimum wage, and exploits the fact that there has been no increase in the minimum wage in previous years, to account for heterogeneous labor market prospects of low-wage workers relative to high-wage workers. Using detailed administrative records to track workers before and after the policy change, we show that the minimum wage hike significantly increased the earnings of low-wage workers. This direct effect was amplified by wage spillovers reaching the median of the pre-policy income distribution. Overall, we find no negative effects on the employment prospects of low-wage workers. However, we provide suggestive evidence that young workers, highly exposed municipalities, and tradable sectors may be more negatively affected. In contrast, labor market concentration or the presence of envelope wages appear to be associated with lower job losses. Taken together, our findings imply an employment elasticity with respect to the minimum wage of -0.021, and an own-wage elasticity of -0.033, suggesting that wage gains dominated employment losses. |
| Keywords: | minimum wage, employment, wages |
| JEL: | J23 J38 J48 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10064&r=lma |
| By: | Schultheiss, Tobias (University of Zurich); Backes-Gellner, Uschi (University of Zurich) |
| Abstract: | This paper examines the role of lifelong learning in counteracting skill depreciation and obsolescence. We build on findings showing that different skill types have structurally different depreciation rates. We differentiate between occupations with more hard skills versus more soft skills. To do so, we draw on representative job advertisement data that contain machine-learning categorized skill requirements and cover the Swiss job market in great detail across occupations (from 1950–2019). We examine lifelong learning effects for "harder" versus "softer" occupations, thereby analyzing the role of training in counteracting skill depreciation in occupations that are differently affected by skill depreciation. Our results reveal novel patterns regarding the benefits from lifelong learning across occupations: In harder occupations, with large shares of fast-depreciating hard skills, the role of lifelong learning is primarily as a hedge against unemployment risks rather than a boost to wages. In contrast, in softer occupations, in which workers build on more value-stable soft skill foundations, the role of lifelong learning instead lies mostly in acting as a boost for upward career mobility and leads to larger wage gains. |
| Keywords: | skill depreciation, lifelong learning, soft vs. hard occupations, hedging against unemployment, boosting wages |
| JEL: | M53 J24 I2 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15688&r=lma |
| By: | Link, Sebastian (Ifo Institute for Economic Research) |
| Abstract: | This paper studies the price and employment response of firms to the introduction of a nation-wide minimum wage in Germany. Widely throughout the economy, affected firms responded by rapidly and frequently increasing prices without cutting employment. These decisions are strongly interrelated: Firms that increased prices relatively more often also showed a less negative employment response. The relative importance of both adjustment margins is associated with product market competition and the specific economic situation firms face during the treatment period. Hence, understanding the role of price pass-through appears to be key for explaining employment effects of minimum wages. |
| Keywords: | minimum wage, price pass-through, employment, interrelation of firms' choices |
| JEL: | E31 E24 J38 J31 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15701&r=lma |
| By: | Sebastian Siegloch (University of Cologne, CEPR, and ZEW); Nils Wehrhöfer (Deutsche Bundesbank and ZEW); Tobias Etzel (Deutsche Bundesbank) |
| Abstract: | We analyze the effects of a large place-based policy, subsidizing up to 50% of the investment costs of manufacturing firms in East Germany. We show that a one percentage-point decrease in the subsidy rate leads to a 1% decrease in manufacturing employment. We document important local spillovers for untreated construction and retail sectors, counties connected via trade, and local tax rates. There is no evidence for regional reallocation or changes in commuting and residential decisions. The cost per job amount to at most $23000. Last, we show that local subsidies are substantially more effective in curbing regional inequality than place-blind policies. |
| Keywords: | place-based policies, employment, spillovers, administrative microdata |
| JEL: | H24 J21 J23 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:210&r=lma |
| By: | Aparicio Fenoll, Ainoa (University of Turin); Quaranta, Roberto (Collegio Carlo Alberto) |
| Abstract: | Programs to fight poverty aim at allowing individuals to support themselves ex-post, when they are not part of the program anymore. We compare the ex-post effects of conditional and unconditional cash transfer programs on labor income. We use an experiment where low-income individuals are randomly assigned to three groups: no treatment, unconditional cash transfer, and cash transfer conditional on reemployment training. We exploit Social Security data, including all registered labor contracts in Italy. Results show that conditional cash transfers have positive and sizeable effects on labor income, both contemporaneous and ex-post effects. These effects last at least two years and are led by males. Unconditional cash transfers have no impact on labor income. |
| Keywords: | cash transfers, conditionality, poverty, social security data |
| JEL: | J21 J24 I31 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15658&r=lma |
| By: | Lin Shao; Faisal Sohail; Emircan Yurdagul |
| Abstract: | This paper uses Canadian matched employer-employee data to show that working hours are gross complements in production rather than perfect substitutes, as is typically assumed. We exploit within-establishment and individual-level variation in hours and wages to document novel evidence consistent with complementarities in hours worked. Next, we estimate an elasticity of substitution in working hours of 0.69 in the aggregate and between 0.52 and 1.04 at the industry level. We validate our estimates by showing that industries with higher elasticities exhibit greater flexibility in hours. Our findings have important implications for research on labor supply and the efficacy of policies that aim to influence it. |
| Keywords: | Economic models; Labour markets |
| JEL: | E23 J23 J31 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:22-47&r=lma |
| By: | Kuhn, Andrea (Bertelsmann Foundation) |
| Abstract: | This paper presents an empirical exploration of the geography of adolescents' occupational choices, using data covering a single cross-section of the population of all individual-level apprenticeship contracts in the canton of Bern in Switzerland. The unique feature of the data is that they cover both the training firm's location and the apprentice's domicile at a highly disaggregated level. Even though the geographic area covered by these data is small by any absolute standard, the data show that there are large and pervasive differences across different local apprenticeship markets. More specifically, the data show that apprenticeship positions are highly concentrated in a few local apprenticeship markets and that the same regions are also characterized by a larger number of distinct training occupations from which perspective apprentices may choose. Moreover, yet somewhat less obvious, there is also significant variation in the occupational task structure across local apprenticeship markets. These empirical regularities may have implications for various research questions in the context of adolescents' occupational choices. |
| Keywords: | occupational choice, apprenticeship, geography, spatial heterogeneity, regional occupational structure |
| JEL: | I21 J24 R12 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15679&r=lma |
| By: | Montobbio, Fabio (Università Cattolica del Sacro Cuore); Staccioli, Jacopo (Università Cattolica del Sacro Cuore); Virgillito, Maria Enrica (Università Cattolica del Sacro Cuore); Vivarelli, Marco (Università Cattolica del Sacro Cuore) |
| Abstract: | What have we learned, from the most recent years of debate and analysis, of the future of work being threatened by technology? This paper presents a critical review of the empirical literature and outlines both lessons learned and challenges ahead. Far from being fully exhaustive, the review intends to highlight common findings and main differences across economic studies. According to our reading of the literature, a few challenges—and also the common factors affecting heterogeneous outcomes across studies—still stand, including (i) the variable used as a proxy for technology, (ii) the level of aggregation of the analyses, (iii) the deep heterogeneity of different types of technologies and their adopted mix, (iv) the structural differences across adopters, and (v) the actual combination of the organisational practices in place at the establishment level in affecting net job creation/destruction and work reorganisation. |
| Keywords: | technology, employment, skills, occupations, tasks, future of work |
| JEL: | O33 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15731&r=lma |
| By: | Oladipo, Oluwasheyi S. (State University of New York at Old Westbury); Shim, Hyoung Suk (CUNY - College of Staten Island) |
| Abstract: | This paper empirically examines firm owners' gender difference in labor demand. We estimate the average treatment effect (ATE) of female ownership on employment of the firm using the 2007 Survey of Business Owners (SBO) Public Use Micro Sample (PUMS), provided by the U.S. Census Bureau. Because female microentrepreneurs potentially demand more labor so as to allocate time for household production, we hypothesize a condition under which female microentrepreneurs employ more, and that is, if they are free from financial constraints. We show first that the estimation of the ATE for female ownership can have a downward selection bias that may yield negative ATE estimates, and this downward selection bias comes from male owners being less financially constrained than female owners. We then perform the two-stage least squares (TSLS) estimation using two sets of instrumental variables (IVs), which are indicator variables for i) inheritance; and ii) loans from bank or family/friend. The estimation results present that the female owner effect on labor demand as local average treatment effect (LATE) is identified and consistently estimated by using the IVs. From the main model estimation, we find a positive and statistically significant female owner effect that female owners hire more employees than male owners by about 25.8%. |
| Keywords: | entrepreneurship, gender, labor demand, startups |
| JEL: | G31 J16 J22 J23 L26 M13 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15690&r=lma |
| By: | Bussink, Henri (SEO Amsterdam); ter Weel, Bas (SEO Amsterdam) |
| Abstract: | This study analyses costs and benefits of a public-private funded individual learning account (ILA) for the labour force in the Netherlands. We consider an ILA that is funded by subsidies targeted at low- and medium-educated workers and co-funded by training levies as a share of the wage bill. We simulate two alternative steady-state scenarios about the uptake of resources and increase in training activity, using a lifecycle model of human capital investments. We derive predictions for gross earnings, income inequality and costs (training subsidies and tax deductions) and benefits (tax revenues and fewer unemployment benefits). Our results show how the balance of costs and benefits depends on the interplay between take-up rates, returns to training and the deadweight loss of subsidizing an ILA for the whole labour force. Our model and results contribute to policy tradeoffs about the introduction of ILA’s to stimulate the resilience of the labour force. |
| Keywords: | individual learning accounts, human capital investments, lifelong learning |
| JEL: | J24 J33 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15649&r=lma |
| By: | Daron Acemoglu; Gary W. Anderson; David N. Beede; Cathy Buffington; Eric E. Childress; Emin Dinlersoz; Lucia S. Foster; Nathan Goldschlag; John C. Haltiwanger; Zachary Kroff; Pascual Restrepo; Nikolas Zolas |
| Abstract: | This paper describes the adoption of automation technologies by US firms across all economic sectors by leveraging a new module introduced in the 2019 Annual Business Survey, conducted by the US Census Bureau in partnership with the National Center for Science and Engineering Statistics (NCSES). The module collects data from over 300,000 firms on the use of five advanced technologies: AI, robotics, dedicated equipment, specialized software, and cloud computing. The adoption of these technologies remains low (especially for AI and robotics), varies substantially across industries, and concentrates on large and young firms. However, because larger firms are much more likely to adopt them, 12-64% of US workers and 22-72% of manufacturing workers are exposed to these technologies. Firms report a variety of motivations for adoption, including automating tasks previously performed by labor. Consistent with the use of these technologies for automation, adopters have higher labor productivity and lower labor shares. In particular, the use of these technologies is associated with a 11.4% higher labor productivity, which accounts for 20-30% of the difference in labor productivity between large firms and the median firm in an industry. Adopters report that these technologies raised skill requirements and led to greater demand for skilled labor but brought limited or ambiguous effects to their employment levels. |
| JEL: | E22 J20 J24 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30659&r=lma |
| By: | Sabien Dobbelaere (: Vrije Universiteit Amsterdam, Tinbergen Institute and IZA Institute of Labor Economics); Catherine Fuss (Economics and Research Department, NBB); Mark Vancauteren (Universiteit Hasselt and Statistics Netherlands (CBS)) |
| Abstract: | This paper examines the relationship between offshoring and the prevalence and intensity of labor market imperfections at the firm level. For this purpose, we use Belgian and Dutch manufacturing firm-level data over the period 2009-2017 from Business registers and VAT declarations combined with information in the Transaction Trade database that reports values and volumes of international transactions at the country, firm and product level. In both countries, we find that wage markup-pricing stemming from workers’ monopoly power is more prevalent than wage markdown-pricing originating from employers’ monopsony power. Offshoring benefits Belgian and Dutch employers in that imports of final as well as intermediate goods are associated with a larger prevalence and intensity of wage markdowns. The opposite holds for the prevalence of wage markups. In Belgium, we also find that offshoring is negatively related to the intensity of wage markups measured by workers’ bargaining power. The origin of imports matters for the prevalence of labor market imperfections in Belgian firms. This is far less so in Dutch firms, which could be explained by their more global focus and the more global scale of the vertical chain in which they operate. |
| Keywords: | Wage markdowns, wage markups, firm-level offshoring |
| JEL: | F14 F16 J42 J50 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:202210-425&r=lma |
| By: | Lerche, Adrian (LMU Munich) |
| Abstract: | This paper estimates the direct effects of investment tax credits on firms' production behavior and the additional indirect effects arising from agglomeration economies. Exploiting a change in tax credit rates by firm size in Germany, I find that manufacturing firms increase capital and employment, with labor demand in information and communication technology-intensive industries shifting towards college-educated workers. Using geolocation data, I show that agglomeration benefits lead to a sizable further firm production expansion with these benefits materializing within distances of 5 kilometers. Worker flows from the service sector and from non-employment, rather than between manufacturing firms, explain the employment effects. |
| Keywords: | investment tax incentives, capital, labor demand, agglomeration |
| JEL: | D22 H25 H32 J23 R11 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15668&r=lma |
| By: | Benjamin G. Hyman; Matthew Freedman; Shantanu Khanna; David Neumark |
| Abstract: | We examine firm responses to location-based hiring subsidies. We leverage institutional features of the California Competes Tax Credit (CCTC), a large-scale business incentive program that incorporates best practices from prior job creation policies. The CCTC award selection procedure combines formula-based and discretionary components. Leveraging applicant score eligibility cutoffs in a regression discontinuity design and taking advantage of rich longitudinal microdata on establishments and their parent firms, we find that firms expand activity in California in response to CCTC awards, particularly in disadvantaged parts of the state. Moreover, we find little evidence of spillovers to other states. Our results suggest that targeted and audited hiring subsidies can be effective in promoting local business expansions without significant cross-state displacement effects. |
| JEL: | H25 H71 H73 J23 J38 R12 R38 R58 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30664&r=lma |
| By: | Schultheiss, Tobias (University of Zurich); Backes-Gellner, Uschi (University of Zurich) |
| Abstract: | In an environment of accelerating technological change and increasing digitalization, firms need to adopt new technologies faster than ever before to stay competitive. This paper examines whether updates of education curricula help to bring new technologies faster into firms' workplaces. We study technology changes and curriculum updates from an early wave of digitalization (i.e., computernumerically controlled machinery, computer-aided design, and desktop publishing software). We take a text-as-data approach and tap into two novel data sources to measure change in educational content and the use of technology at the workplace: first, vocational education curricula and, second, firms' job advertisements. To examine the causal effects of adding new technology skills to curricula on the diffusion of these technologies in firms' workplaces (measured by job advertisements), we use an event study design. Our results show that curriculum updates substantially shorten the time it takes for new technologies to arrive in firms' workplaces, especially for mainstream firms. |
| Keywords: | technological change, digitalization, curricula updates, technology diffusion, text-as-data |
| JEL: | O33 I25 J23 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15689&r=lma |
| By: | Jochen Mankart (: Deutsche Bundesbank); Romanos Priftis (European Central Bank); Rigas Oikonomou (UC Louvain & University of Surrey) |
| Abstract: | We develop a quantitative framework in which income inequality arises endogenously in response to productivity shocks. The framework accommodates sectoral inputoutput linkages, arbitrary elasticities of factors and intermediates, and heterogeneous workers that endogenously choose to supply their labor across sectors. Workers are imperfectly mobile across sectors, parameterized by a Roy-Frechet setup. We characterize the impact of Harrod-neutral shocks and changes in labor mobility on income inequality and welfare up to first- and second order. Inequality arises in equilibrium due to a combination of changes in income share and labor use across all sectors due to their dependencies in the input-output network. We calibrate the model using Belgian data and provide quantitative results, confirming strong non-linearities. These results suggest that labor market-improving policies can have strong effects on both welfare and inequality, but the impact is both quantitatively and qualitatively dependent on the structure of the economy and its initial equilibrium. |
| Keywords: | Income inequality, production networks, disaggregated macro models, wage gaps, mobility of workers, heterogeneous factors of production. |
| JEL: | D24 D33 D50 D57 D63 E24 J31 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:202210-417&r=lma |
| By: | Zaiceva, Anzelika (University of Modena and Reggio Emilia) |
| Abstract: | This chapter reviews economic studies on multitasking in household production. Whereas multitasking or task juggling in the workplace has been analyzed more widely, economic literature on multitasking in a household is relatively scarce. The chapter first provides relevant measures of such multitasking activities, discusses time diary data, and presents some empirical facts employing Harmonized European Time Use Survey data. It then reviews theoretical and empirical contributions to this topic, focusing on childcare, food consumption, and remote work. It also reviews the determinants of multitasking and identifies the factors that are more likely to affect these activities. In addition, it discusses multitasking by certain groups, such as ethnic minorities and children. Finally, it offers policy implications and suggestions for future research. |
| Keywords: | household production, multitasking, simultaneous activities, time use |
| JEL: | D13 J22 J16 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15681&r=lma |
| By: | Claudio Costanzo |
| Abstract: | Labor automation is generally associated with a decrease in demand for mid-skill jobs,often routine-intensive, in favor of the others. This paper investigates its effects onfertility timing decisions using European panel data, by constructing a measure of localexposure to industrial robotics, and by adopting a Fixed Effect with Two-StageLeast Squares methodology. Higher exposure is associated with an anticipation offertility in low- and high-skilled regional labor markets, and with its postponementin medium-skilled ones. An optimal stopping model, in which individuals adjust thetiming based on their future labor opportunities, formalizes the causal intuition. Itsnumerical application, based on survey data, suggests that the effect of an increase inobserved automation on the willingness to postpone fertility is concave with respect toeducation, consistently with the Routine-Biased Technological Change hypothesis. |
| Keywords: | Automation; Demography; Fertility; Robots |
| JEL: | J13 J21 J24 O33 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/351586&r=lma |
| By: | Hamilton, Barton H. (Washington University, St. Louis); Hincapié, Andrés (University of North Carolina, Chapel Hill); Kalish, Emma C. (Johns Hopkins University); Papageorge, Nicholas W. (Johns Hopkins University) |
| Abstract: | Health-maximizing and welfare-maximizing behaviors can be at odds, especially among disadvantaged groups, generating health disparities. We estimate a lifecycle model of medication and labor supply decisions using data on HIV-positive men. We evaluate an effective HIV treatment innovation that had harsh side effects: HAART. Measured in lifetime utility gains, HAART disproportionately benefitted higher-education men. Lower-education men were more likely to avoid the side effects of HAART that interfered with work. A counterfactual mandate to use HAART improves health but increases inequality because low-education individuals work less. A counterfactual non-labor income subsidy increases HAART adoption and improves health among lower-education individuals. |
| Keywords: | health disparities, health behaviors, dynamic demand, side effects, structural models, HIV/AIDS |
| JEL: | I12 I14 I20 J2 O31 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15711&r=lma |
| By: | Wouter Gelade (: Economics and Research Department, National Bank of Belgium & University of Namur (DeFiPP)); Maud Nautet (Economics and Research Department, National Bank of Belgium); Céline Piton (Economics and Research Department, National Bank of Belgium & Université libre de Bruxelles (SBS-EM, CEBRIG, DULBEA)) |
| Abstract: | The impact of a job loss on partner’s labour supply – often called the added worker effect – is a well-studied phenomenon. However, people might already adjust their labour supply when their partner is at risk of losing his/her job. Using Labour Force Survey (LFS) microdata, we quantify this effect for 16 European countries over the period 2005-2020. When a household member is at risk of losing his/her job, the partner is 30% more likely to enter the labour market (extensive margin) and 52% more likely to (want to) increase working hours (intensive margin). These effects are almost as big as those of an actual job loss for the intensive margin, and a bit more than half of those for the extensive margin. Fear of job loss is thus an important additional factor influencing households’ labour supply. This is particularly true in periods of crisis, in which the effects of fear of job loss and actual job loss are equally big. Heterogeneity analysis shows that different households adjust their labour supply at different moments, with low-educated people already adjusting when fearing job loss, while the high-educated wait for this risk to materialise. |
| Keywords: | Labour supply, household decisions, risk, added worker effect. |
| JEL: | J22 D13 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:202210-419&r=lma |
| By: | Attanasio, Orazio (Yale University); de Barros, Ricardo Paes (Insper, São Paulo); Carneiro, Pedro (University College London); Evans, David K. (Center for Global Development); Lima, Lycia (Sao Paulo School of Economics); Olinto, Pedro (World Bank); Schady, Norbert (World Bank) |
| Abstract: | This study examines the impact of publicly provided daycare for children aged 0-3 on outcomes of children and their caregivers over the course of seven years after enrollment into daycare. At the end of 2007, the city of Rio de Janeiro in Brazil used a lottery to assign children to limited public daycare openings. Winning the lottery translated to a 34 percent increase in time in daycare during a child's first four years of life. This allowed caregivers more time to work, resulting in higher incomes for beneciary households in the first year of daycare attendance and 4 years later (but not after 7 years, by which time all children were eligible for universal schooling). The rise in labor force participation is driven primarily by grandparents and by adolescent siblings residing in the same household as (and possibly caring for) the child, and not by parents, most of whom were already working. Beneciary children saw sustained gains in height-for-age and weight-for-age, due to better nutritional intake at school and at home. Gains in beneciary children's cognitive development were observed 4 years after enrolment but not later. |
| Keywords: | early child development, childcare, Brazil |
| JEL: | I21 I28 J22 O15 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15705&r=lma |
| By: | Kogure, Katsuo; Kubo, Masahiro |
| Abstract: | This paper examines the consequences of forced displacement for Cambodian refugees during the Cambodian conflict (1978-1991). Using complete count 1998 Census microdata, we focus on the two major groups of returnees, namely those from the neighboring countries of Thailand and Vietnam, which were under the control of different great powers, respectively Western and Eastern, during the Cold War. The former stayed in refugee camps with humanitarian assistance prior to repatriation and the latter did not. Consistent with the availability of humanitarian assistance, our analyses reveal that the returnees from Thailand attained higher levels of education - while those from Vietnam, by contrast, attained lower levels of education - than stayers. On the other hand, the two groups both experienced worse labor market outcomes, with employment shifts from the primary sector to the immature tertiary sector. Such adverse displacement impacts are relatively stronger for later returnees. We provide suggestive evidence that adverse displacement impacts can be attributed to congested labor markets resulting from limited access to available agricultural land, exacerbated by the high contamination of landmines and UXOs during the conflict. Our results demonstrate that forced displacement due to conflict in a developing country can be a potential source of future misallocation. |
| Keywords: | conflict, forced displacement, refugees, repatriation, Cambodia |
| JEL: | O15 J24 D74 N35 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hiasdp:hias-e-125&r=lma |
| By: | Kohei Daido (School of Economics, Kwansei Gakuin University); Takeshi Murooka (Osaka School of International Public Policy, Osaka University) |
| Abstract: | We study multitasking problems where an agent engages in both a contractible task and a non-contractible task, which are substitutes. The agent has private information on the value of the non-contractible task, and there are followers who can also contribute to this task. We highlight a new mechanism by incorporating leading-by-example (Hermalin, 1998) in a multitasking model. To prevent excessive effort by the agent with low value on the non-contractible task, the principal provides high-powered incentives for the contractible task. We discuss its organizational implications to pay for performance, incentives to help colleagues, and prevention of overwork. |
| Keywords: | Multitasking, Signaling, Leadership, Pay for Performance, Help, Overwork |
| JEL: | D82 D86 J33 M52 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:osp:wpaper:22e005&r=lma |
| By: | Vladasel, Theodor (Pompeu Fabra University); Parker, Simon C. (Western University, Canada); Sloof, Randolph (University of Amsterdam); van Praag, Mirjam C. (Copenhagen Business School) |
| Abstract: | Revenue drift, where insufficient attention is given to economic, relative to social, goals, threatens social enterprise performance and survival. We argue that financial incentives can address this problem by redirecting employee attention to commercial tasks and attracting workers less inclined to fixate on social tasks. In an online experiment with varying incentive levels, monetary rewards succeed in directing worker effort to commercial tasks; high-powered incentives attract less prosocial employees, but low-powered incentives do not alter workforce composition. Social enterprises combining monetary rewards with a social mission not only attract more workers, but are also able to guard against revenue drift. |
| Keywords: | incentives, multitasking, experiment, social enterprise, prosociality |
| JEL: | D22 J33 L21 L31 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15716&r=lma |
| By: | Caron, Laura (Columbia University); Tiongson, Erwin R. (Georgetown University) |
| Abstract: | The COVID-19 pandemic placed new constraints and prices on commuting to work around the world. However, traditional methods of measuring household welfare (and, accordingly, poverty and inequality) based on expenditures have not considered these changes. First, we present theory showing significant mismeasurement of welfare for households who can shift into remote work during the pandemic. We then propose methods to impute transportation cost equivalents for household expenditure aggregates. We use Georgia as a case study to compare these methods and assess impacts on poverty and inequality. The proportion of remote work is low, only about 9%, meaning that the impact on overall inequality is negligible. However, considering transportation costs can result in up to a 40% reduction in the measured poverty rate among remote-working households. |
| Keywords: | poverty measurement, inequality measurement, consumption aggregate, expenditures, imputation, living costs, COVID-19, welfare |
| JEL: | I32 D30 R20 J32 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15670&r=lma |