nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2022‒12‒19
twenty-one papers chosen by
Joseph Marchand
University of Alberta

  1. The Effects of a Disability Employment Quota When Compliance Is Cheaper than Defiance By Krekó, Judit; Telegdy, Álmos
  2. Routinization, Within-Occupation Task Changes and Long-Run Employment Dynamics By Davide Consoli; Giovanni Marin; Francesco Rentocchini; Francesco Vona
  3. The Role of Learning in Returns to College Major: Evidence from 2.8 Million Reviews of 150,000 Professors By Novik, Vitaliy
  4. The global divergence in the de-routinisation of jobs By Piotr Lewandowski; Albert Park; Simone Schotte
  5. How Substitutable Are Workers? Evidence from Worker Deaths By Jäger, Simon; Heining, Jörg
  6. Does Working from Home Work? A Natural Experiment From Lockdowns By Shen, Lucas
  7. The wage elasticity of recruitment By Boris Hirsch; Elke J. Jahn; Alan Manning; Michael Oberfichtner
  8. The Puzzle of Educated Unemployment in West Africa By Girsberger, Esther Mirjam; Meango, Romuald
  9. CFO Working Experience and Tax Avoidance By Panagiotis Karavitis; Pantelis Kazakis; Tianyue Xu
  10. Can Information and Advising Affect Postsecondary Participation and Attainment for Non-Traditional Students? Evidence from a Large-Scale Experiment with the U.S. Army By Andrew C. Barr; Kelli A. Bird; Benjamin L. Castleman; William L. Skimmyhorn
  11. Hours Inequality By Daniele Checchi; Cecilia García-Peñalosa; Lara Vivian
  12. Commitment and the Dynamics of Household Labor Supply By Alexandros Theloudis; Jorge Velilla; Pierre-André Chiappori; J. Ignacio Giménez-Nadal; José Alberto Molina
  13. The Big Three and Board Gender Diversity: The Effectiveness of Shareholder Voice By Todd A. Gormley; Vishal K. Gupta; David A. Matsa; Sandra C. Mortal; Lukai Yang
  15. COVID-19 and the resilience of European firms: The influence of pre-crisis productivity, digitalisation and growth performance By Teruel, Mercedes; Amaral-Garcia, Sofia; Bauer, Péter; Coad, Alexander; Domnick, Clemens; Harasztosi, Péter; Pál, Rozália
  16. Strengthening the social safety net in Korea By Hyunjeong Hwang; Axel Purwin; Jon Pareliussen
  17. Public Childcare, Labor Market Outcomes of Caregivers, and Child Development: Experimental Evidence from Brazil By Orazio Attanasio; Ricardo Paes de Barros; Pedro Carneiro; David K. Evans; Lycia Lima; Pedro Olinto; Norbert Schady
  18. Does "Made in China 2025" Work for China? Evidence from Chinese Listed Firms By Lee G. Branstetter; Guangwei Li
  19. Disentangling the Effects of Large Minimum Wage and VAT Changes on Prices: Evidence from Mexico By Calderón Cerbón Mariana; Cortés Espada Josué Fernando; Pérez Pérez Jorge; Salcedo Alejandrina
  20. Paying Moms to Stay Home: Short and Long Run Effects on Parents and Children By Gruber, Jonathan; Huttunen, Kristiina; Kosonen, Tuomas
  21. Immigration, integration, and the informal economy in OECD countries By Ben Atta, Oussama; Chort, Isabelle; Senne, Jean Noël

  1. By: Krekó, Judit (Central European University); Telegdy, Álmos (Corvinus University of Budapest)
    Abstract: This paper evaluates the effects of the Hungarian disability employment quota, which requires firms over a certain size to employ people with disabilities or pay a noncompliance tax. We employ a regression discontinuity design on firm-level data to estimate the effect on the quota on the employment of persons with disabilities, when the tax increased from very low levels to 170 percent of the lowest wage cost required to meet the quota. We estimate a lower bound of the effect that takes into account the bias resulting from bunching of firms below the threshold. Firms hire 0.24–0.29 additional disabled workers on average when the tax increased, with a lower bound of 0.16. When the threshold is raised from 20 to 25 employees, bunching of firms and the estimated effect disappears around the old threshold. The policy effect is weaker in regions with few disabled individuals, implying that the policy outcomes are hampered by low labor supply, materializing in high fixed costs of hiring, as predicted by our model.
    Keywords: disability employment quota, labor demand, regression discontinuity, Hungary
    JEL: J14 H32 J23
    Date: 2022–11
  2. By: Davide Consoli (INGENIO CSIC-UPV); Giovanni Marin (Department of Economics, Society and Politics, University of Urbino Carlo Bo and SEEDS); Francesco Rentocchini (European Commission, Joint Research Centre and Department of Economics, Management and Quantitative Methods, University of Milan); Francesco Vona (University of Milan, Fondazione Eni Enrico Mattei and OFCE, Sciences Po Abstract: The present study adds to the literature on routinization and employment by capturing within-occupation task changes over the period 1980-2010. The main contributions are the measurement of such changes and the combination of two data sources on occupational task content for the United States: the Dictionary of Occupational Titles and the Occupational Information Network. We show that within-occupation reorientation away from routine tasks: i) accounts for 1/3 of the decline in routine-task use; ii) accelerates in the 1990s, decelerates in the 2000s but with significant convergence across occupations; iii) allows workers to escape the employment and wage decline, conditional on the initial level of routine-task intensity. The latter finding suggests that task reorientation is a key channel through which labour markets adapt to various forms of labour-saving technological change.)
    Keywords: Tasks, Routinization, Technological Change, Employment Dynamics, Race between Technology and Education
    JEL: J23 J24 O33
    Date: 2022–11
  3. By: Novik, Vitaliy
    Abstract: Why do some college majors have much higher returns than others? I ask if differences in returns are due to differences in quality of education across majors. I use a novel dataset in which college students rate courses and professors on difficulty, the level of effort required to obtain an A. Major difficulty correlates positively with study hours, implying students respond to grading standards when choosing study time. Using the American Community Survey, I show that harder majors earn more, under a variety of specifications. To deal with selection concerns I use the College Scorecard to compare graduates from the same university-major but exposed to harder or easier professors due to being in different graduation year cohorts. Those exposed to harder professors earn more one year after graduation. I also use the NLSY97 panel to estimate an event study, finding that difficulty causes lower earnings while in college but higher earnings after graduation and provides access to higher skilled occupations. I estimate that one-third of the variance in returns to major can be explained by differences in learning as proxied by difficulty.
    Keywords: Human Capital, Returns to Major, College Education
    JEL: I26 J24 J31
    Date: 2022–11–12
  4. By: Piotr Lewandowski; Albert Park; Simone Schotte
    Abstract: We establish new stylised facts about the global evolution and distribution of routine and non-routine work, relaxing the common assumption that occupations are identical globally. We combine survey data and regression models to predict the country-specific routine-task intensity of occupations in 87 countries employing over 2.5 billion workers, equivalent to 75% of global employment. From 2000 to 2017, the shift away from routine work was much slower in low- and middle-income countries than in high-income countries, widening gaps in the nature of work. Low– and middle-income countries remained the dominant provider of routine work. Not accounting for differences in occupation-specific job tasks across countries leads to a significant overestimation of the role of non-routine tasks in less developed countries.
    Keywords: non-routine, labour, tasks, jobs, cross-country
    JEL: J21 J23 J24
    Date: 2022–11
  5. By: Jäger, Simon (IZA); Heining, Jörg (Institute for Employment Research (IAB), Nuremberg)
    Abstract: We estimate how exogenous worker exits affect firms' demand for incumbent workers and new hires. Drawing on administrative data from Germany, we analyze 34,000 unexpected worker deaths, which, on average, raise the remaining workers' wages and retention probabilities. The average effect masks substantial heterogeneity: Coworkers in the same occupation as the deceased see positive wage effects; coworkers in other occupations experience wage decreases when a high-skilled or specialized worker dies. Our findings imply substantial replacement costs, which are larger in thin markets and when skills are specialized.
    Keywords: hiring costs, human capital specificity, labor market thickness
    JEL: J20 J30 J63
    Date: 2022–11
  6. By: Shen, Lucas
    Abstract: Using tracked changes from a large open-source software platform, this paper studies how working from home affected the output of individuals working in tech. The basis of the natural experiment comes from idiosyncratic and state-imposed workplace closures during the COVID-19 pandemic. I find a negative but almost-negligible change in individual-level output of 0.5 percent (standard error of 0.091 percent). Overall, and based on descriptive analyses of the timestamped data, tracked changes in software development cadences approximate regular work activity and provide a useful avenue for future studies of work.
    Keywords: Real-time data; Work from home; GitHub; Labor economics
    JEL: C81 J01 J24 M54 O3
    Date: 2022–11
  7. By: Boris Hirsch; Elke J. Jahn; Alan Manning; Michael Oberfichtner
    Abstract: One of the factors affecting the market power of employers is the extent to which higher wages makes recruitment easier. 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
    Date: 2022–11–08
  8. By: Girsberger, Esther Mirjam (University of Technology, Sydney); Meango, Romuald (University of Oxford)
    Abstract: Many developing countries exhibit a puzzling pattern given their scarce human capital: unemployment rates increase with education. We develop and estimate a model where educated unemployment arises from heterogeneous workers participating in a frictional labour market with three sectors (public, private and self-employment). We estimate that public sector distortions explain around two-thirds of educated unemployment in urban Burkina Faso and one-quarter in Senegal. We then simulate three equally costly policies. In contrast with public job creation and subsidies to self-employment income, subsidies for private sector vacancy creation effectively reduce educated unemployment and improve aggregate workers' welfare.
    Keywords: unemployment, education, search and matching model, urban West Africa
    JEL: J24 J64 E24
    Date: 2022–11
  9. By: Panagiotis Karavitis; Pantelis Kazakis; Tianyue Xu
    Abstract: We ask whether CFO's managerial skills affect corporate tax avoidance using a sample of Chinese-listed companies. To that end, we develop a CFO managerial skills index based on four dimensions of the CFO's work experience: (1) the number of current positions a CFO holds, (2) the number of functional departments a CFO has worked in during his career, (3) the number of firms he has worked for, and (4) whether the CFO has political connections. We find that CFOs with high managerial skills are more likely to engage in aggressive tax avoidance. This effect is weakened when CFOs are in their first year of employment, approaching retirement, and are too busy. Moreover, we find that CFOs with general management skills are more likely to adjust corporate tax avoidance to levels similar to their peers.
    Keywords: Chief Financial Officer (CFO); work experience; managerial skills; tax avoidance
    JEL: G30 H26 J24 M41
    Date: 2022–11
  10. By: Andrew C. Barr; Kelli A. Bird; Benjamin L. Castleman; William L. Skimmyhorn
    Abstract: Lack of information and advising prior to college matriculation may contribute to poor post-secondary outcomes among non-traditional students. We conducted a large-scale, multi-arm field experiment with the U.S. Army to investigate whether a package of research-based personalized information and access to advising affects postsecondary choices and attainment among a large non-traditional adult population. We find no impact of the intervention on whether veterans enroll in college, on the quality of their college enrollment, or on their persistence in college. Our results suggest that influencing non-traditional populations’ educational decisions and outcomes will require substantially more intensive programs.
    JEL: H5 I23 J24
    Date: 2022–11
  11. By: Daniele Checchi (University of Milan and IZA); Cecilia García-Peñalosa (Aix Marseille University, CNRS, EHESS AMSE (Marseille, France), CEPR and CESifo); Lara Vivian (European Commission -Directorate-General for Economic and Financial A airs.)
    Abstract: The vast literature on earnings inequality has so far largely ignored the role played by hours of work. This paper argues that in order to understand earnings dispersion we need to consider not only the dispersion of hourly wages but also inequality in hours worked as well as the correlation between the two. We use data for the US, the UK, France, and Germany over the period 1991-2016 to examine the evolution of inequality in hours worked and of the correlation between individual hours and wages, assessing their contribution to recent trends in earnings inequality. We find that, other than in the US, hours inequality is an important force, and that it has increased over the period under analysis. The elasticity of hours with respect to wages has also played a key role, notably in the two continental economies. This elasticity used to be negative, thus tending to reduce inequality as those with lower hourly wages worked longer hours, but has increased over the past decades, becoming nil or positive, and hence eroding an important equalizing force. The paper examines which are the potential factors behind the change in the elasticity, notably the role of trade and labour market institutions
    Keywords: earnings inequality, working hours, hours elasticity
    JEL: D31 J22
    Date: 2022–11
  12. By: Alexandros Theloudis (Tilburg University); Jorge Velilla (University of Zaragoza); Pierre-André Chiappori (Columbia University); J. Ignacio Giménez-Nadal (University of Zaragoza); José Alberto Molina (Departamento de Análisis Económico, Universidad de Zaragoza)
    Abstract: The extent to which individuals commit to their partner for life has important implications. This paper develops a lifecycle collective model of the household, through which it characterizes behavior in three prominent alternative types of commitment: full, limited, and no commitment. We propose a test that distinguishes between all three types based on how contemporaneous and historical news affect household behavior. Our test permits heterogeneity in the degree of commitment across households. Using recent data from the Panel Study of Income Dynamics, we reject full and no commitment, while we find strong evidence for limited commitment.
    Keywords: Household behavior; Intertemporal choice; Commitment; Collective model; Family labor supply; Dynamics; Wages; PSID
    JEL: D12 D13 D15 J22 J31
    Date: 2022–11–18
  13. By: Todd A. Gormley; Vishal K. Gupta; David A. Matsa; Sandra C. Mortal; Lukai Yang
    Abstract: In 2017, “The Big Three” institutional investors launched campaigns to increase gender diversity on corporate boards. We estimate that their campaigns led American corporations to add at least 2.5 times as many female directors in 2019 as they had in 2016. Firms increased diversity by identifying candidates beyond managers’ existing networks and by placing less emphasis on candidates’ executive experience. Firms also promoted more female directors to key board positions, indicating firms’ responses went beyond tokenism. Our results highlight index investors’ ability to effectuate broad-based governance changes and the important impact of investor buy-in in increasing corporate-leadership diversity.
    JEL: G34 J71 M12 M14
    Date: 2022–11
  14. By: Mattia Filomena (Department of Economics and Social Sciences, Marche Polytechnic University); Matteo Picchio (Department of Economics and Social Sciences, Marche Polytechnic University)
    Abstract: We estimate the impact of temperatures on work related accident rates in Italy by using daily data on weather conditions matched to administrative daily data on work related accidents. The identification strategy of the causal effect relies on the plausible exogeneity of short-term daily temperature variations in a given spatial unit. We find that both high and cold temperatures impair occupational health by increasing workplace injury rates. The positive effect of warmer weather conditions on work related accident rates is larger for men, in manufacturing and service sectors, and for workplace injuries. Colder temperatures are particularly harmful for commuting accidents and in rainy days.
    Keywords: Climate change; temperatures; weather conditions; work related accidents; safety.
    JEL: J28 J81 Q52 Q54
    Date: 2022–11
  15. By: Teruel, Mercedes; Amaral-Garcia, Sofia; Bauer, Péter; Coad, Alexander; Domnick, Clemens; Harasztosi, Péter; Pál, Rozália
    Abstract: We analyse how the COVID-19 crisis impacted firms' employment levels and digitalisation efforts differently depending on their pre-crisis productivity, digitalisation and growth performance. We match the EIB Investment Survey with firm-level financial statements from the ORBIS database for 27 EU Member States and the United Kingdom. Following the sales decline during the crisis, we show that: (1) Higher productivity firms are less prone to reduce the number of employees both in the short and in the long term; (2) High-growth enterprises are also less prone to reduce the number of employees in the long term; (3) Firms in highly digitalised sectors are less likely to reduce the number of employees; (4) Firms are more likely to increase their use of digital technologies, especially those that were already more digitalised before the crisis.
    Keywords: HGE,labour productivity,digitalisation,COVID-19,Mercedes Teruel,Sofia Amaral-Garcia,Peter Bauer,Alex Coad,Clemens Domnick,Péter Harasztosi,Rozália Pál
    JEL: L22 O47
    Date: 2022
  16. By: Hyunjeong Hwang; Axel Purwin; Jon Pareliussen
    Abstract: Social protection in Korea is designed around traditional forms of employment and excludes a substantial share of workers in non-standard employment. The resulting social protection gaps compound income inequality and undermine financial sustainability as uninsured persons rely on tax-financed benefits. Besides, Korea’s tax and benefit system discourages taking up or returning to low-paid work from social assistance or unemployment benefits. Expanding the reach of employment insurance while redesigning the tax and benefit system could boost work incentives and reduce inequality and poverty. The elderly poverty rate is persistently high, partly because public pensions and social insurance were introduced relatively recently. Better targeting the means-tested Basic Pension could reduce elderly poverty considerably. Lengthening careers is essential to ensure pension sustainability and adequate retirement income for future retirees. Shifting from a severance pay system to a corporate pension would help improve retirement income and lower employers’ incentives to push for early retirements. Reducing inequalities in access to health and long-term care will require expansion of primary care and affordable quality home-based care. This will also help address the overreliance on hospitals and cope with rising demand.
    Keywords: health and inequality, retirement policies, safety, Social security and public pensions
    JEL: H55 I13 J28 J08
    Date: 2022–11–30
  17. By: Orazio Attanasio; Ricardo Paes de Barros; Pedro Carneiro; David K. Evans; Lycia Lima; Pedro Olinto; Norbert Schady
    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 beneficiary 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. Beneficiary children saw sustained gains in height-for-age and weight-for-age, due to better nutritional intake at school and at home. Gains in beneficiary children’s cognitive development were observed 4 years after enrolment but not later.
    JEL: I30 I31 I38
    Date: 2022–11
  18. By: Lee G. Branstetter; Guangwei Li
    Abstract: Rising concern over the impact of Chinese industrial policy has led to severe trade tensions between China and some of its major trading partners. In recent years, foreign criticism has increasingly focused on the so-called "Made in China 2025" initiative. In this paper, we use information extracted from Chinese listed firms' financial reports and a difference-in-differences approach to examine how the "Made in China 2025" policy initiative has impacted firms' receipt of subsidies, R&D expenditure, patenting, productivity, and profitability. We find that while more innovation promotion subsidies seem to flow into the listed firms targeted by the policy, we see little statistical evidence of productivity improvement or increases in R&D expenditure, patenting and profitability. This paper suggests that the “Made in China 2025” initiative may have not yet achieved its target goals.
    JEL: O25 O32
    Date: 2022–11
  19. By: Calderón Cerbón Mariana; Cortés Espada Josué Fernando; Pérez Pérez Jorge; Salcedo Alejandrina
    Abstract: In January 2019, the authorities increased the minimum wage and decreased the value-added tax (VAT) in an effort to boost activity on the northern Mexican border. In this paper we estimate the effects of both policies on prices. We find that the upward pressures on prices due to the minimum wage hike were more than offset by the downward pressures associated with the VAT. In the absence of the VAT reduction policy, average prices in the northern Mexican border would have been higher. We estimate that the effects of the minimum wage on prices tended to be smaller for goods or services produced with a larger share of informal labor.
    Keywords: Minimum wage;Value-Added Tax;Prices
    JEL: J38 J46 H20
    Date: 2022–11
  20. By: Gruber, Jonathan; Huttunen, Kristiina; Kosonen, Tuomas
    Abstract: We study the impacts of a policy designed to reward mothers who stay at home rather than join the labor force when their children are under age three. We use regional and over time variation in child home care allowance to show that home care allowance decreases maternal employment in both the short and long term, with almost three-quarters of the supplement amount offset by lost labor income. The effects are large enough for the existence of home care benefit system to explain the higher child penalty in Finland than comparable nations. Home care benefits also negatively affect the early childhood cognitive test results of children at the age of five, increase the likelihood of choosing vocational rather than academic secondary education track, and increase youth crimes. We confirm that the mechanism of action is changing work/home care arrangements by studying a a day care fee (DCF) reform had the opposite effect of raising incentives to work. We find that this policy increased the labor force participation of mothers and participation of children to day care, and improved child early test and schooling outcomes. This parallel set of findings suggests that on average in Finland, shifting child care from the home to the market increases labor force participation and improves child outcomes.
    Keywords: home care allowance, employment, child development, schooling, Social security, taxation and inequality, J13, J21, J38, fi=Koulutus|sv=Utbildning|en=Education|, fi=Sosiaaliturva|sv=Social trygghet|en=Social security|, fi=Työmarkkinat|sv=Arbetsmarknad|en=Labour markets|,
    Date: 2022
  21. By: Ben Atta, Oussama; Chort, Isabelle; Senne, Jean Noël
    Abstract: This article assesses the impact of immigrant and asylum seeker in ows on the size of the informal sector in host countries from a macroeconomic perspective. We use two indicators of informality provided by Medina and Schneider (2019) and Elgin and Oztunali (2012) combined with migration data from the OECD Interna- tional Migration Database and data on asylum seeker ows from the UNHCR for the period 1997-2017. We estimate a first-difference model, instrumenting immi- grant and asylum seeker ows by their predicted values derived from the estimation of a pseudo-gravity model. Results suggest that both immigrant and asylum seeker in ows increase the size of the informal sector at destination, but the size of the effect is very small: a one percentage point increase in the stock of immigrants as a share of population leads to an increase of the informal sector as a share of GDP of 0.05-0.06 percentage points. Unsurprisingly, the effect is about four times larger for asylum seeker ows, but remains economically insignificant. We investigate several potential channels, and find that integration policies do matter. We find no impact of imported norms or institutions, but rather that the effect is larger in destination countries with a large informal sector. Finally, we estimate a VAR model and find that the impact of in ows on informality is long-lasting.
    Keywords: migration,informal economy,asylum seekers,integration policies,shadow economy
    JEL: F22 E26 J46 K37
    Date: 2022

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