nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2023‒01‒02
sixteen papers chosen by
Joseph Marchand
University of Alberta

  1. Employee Evaluation and Skill Investments: Evidence from Public School Teachers By Eric S. Taylor
  2. What skills and abilities can automation technologies replicate and what does it mean for workers?: New evidence By Julie Lassébie; Glenda Quintini
  3. Heads Up: Does Air Pollution Cause Workplace Accidents? By Victor Lavy; Genia Rachkovski; Omry Yoresh
  4. Robots, Exports and Top Income Inequality: Evidence for the U.S. By Andrés César; Guillermo Falcone; Pablo Garriga
  5. Does the Small Business Programme Benefit Self-Employed Workers? Evidence from Nicaragua By Hee-Seung Yang; Booyuel Kim; Rony Rodriguez-Ramirez
  6. How Much Do Workers Actually Value Working from Home? By Markus Nagler; Johannes Rincke; Erwin Winkler
  7. Does Pay Inequality Affect Worker Effort? An Assessment of Existing Laboratory Designs By Marco Fongoni
  8. Does Ethnic Diversity in Schools Affect Occupational Choices? By Damiano Pregaldini; Simone Balestra; Uschi Backes-Gellner
  9. The empirics of technology, employment and occupations: lessons learned and challenges ahead By Montobbio, Fabio; Staccioli, Jacopo; Virgillito, Maria Enrica; Vivarelli, Marco
  10. Teachers’ Use of Class Time and Student Achievement By Simon M. Burgess; Shenila Rawal; Eric S. Taylor
  11. On Track to Success? Returns to Vocational Education Against Different Alternatives By Sönke Hendrik Matthewes; Guglielmo Ventura
  12. Long Social Distancing By Jose Maria Barrero; Nicholas Bloom; Steven J. Davis
  13. The impact of air pollution on labour productivity in France By Clara Kögel
  14. State Appropriations and Employment at Higher Education Institutions By Peter Hinrichs
  15. Second job holding in Germany – a persistent feature? By Philipp Lentge
  16. Getting off to a flying start? The effects of an early-career international mobility grant on scientific performance By Marielle Non; Jeroen van Honk; Vince van Houten; Inge van der Weijden; Thed van Leeuwen

  1. By: Eric S. Taylor
    Abstract: When an employee expects repeated evaluation and performance incentives over time, the potential future rewards create an incentive to invest in building relevant skills. Because new skills benefit job performance, the effects of an evaluation program can persist after the rewards end or even anticipate the start of rewards. I test for persistence and anticipation effects, along with more conventional predictions, using a quasi-experiment in Tennessee schools. Performance improves with new evaluation measures, but gains are larger when the teacher expects future rewards linked to future scores. Performance rises further when incentives start and remains higher even after incentives end.
    JEL: I21 J24 J45 M5
    Date: 2022–11
  2. By: Julie Lassébie; Glenda Quintini
    Abstract: This paper exploits novel data on the degree of automatability of approximately 100 skills and abilities collected through an original survey of experts in AI, and link them to occupations using information on skill and ability requirements extracted from O*NET. Similar to previous studies, this allows gauging the number of jobs potentially affected by automation and the workers who are most at risk of automation. The focus on the automatability of skills and abilities as opposed to entire occupations permits a direct assessment of the share of highly automatable and bottleneck tasks in each occupation. The study finds that thanks to advances in AI and robotics, several high-level cognitive skills can now be automated. However, high-skilled occupations continue to be less at risk of automation because they also require skills and abilities that remain important bottlenecks to automation. Furthermore, jobs at highest risk of automation will not disappear completely, as only 18 to 27% of skills and abilities required in these occupations are highly automatable. Rather, the organisation of work will change and workers in these jobs will need to retrain, as technologies replace workers for several tasks.
    Keywords: AI, future of work, skills
    JEL: J2 J21 J24 O33 O3
    Date: 2022–12–13
  3. By: Victor Lavy; Genia Rachkovski; Omry Yoresh
    Abstract: Literature has shown that air pollution can have short- and long-term adverse effects on physiological and cognitive performance, leading to adverse outcomes in the labor market. In this study, we estimate the effect of increased nitrogen dioxide (NO₂), one of the primary air pollutants, on the likelihood of accidents in construction sites, a significant factor related to productivity losses in the labor market. Using data from all construction sites and pollution monitoring stations in Israel, we find a strong and significant connection between air pollution and construction site accidents. We find that a 10-ppb increase in NO₂ levels increases the likelihood of an accident by as much as 25 percent. We observe strong nonlinear treatment effects, mainly driven by very high levels of NO₂. The probability of an accident is almost quadrupled when NO₂ levels cross into levels considered by the EPA as “unhealthy” (above the 99th percentile in our sample) compared to levels considered “clean” (below the 95th percentile in our sample). We also implement a set of instrumental variable analyses to support the causal interpretation of the results and present evidence suggestive of a mechanism where the effect of pollution is exacerbated in conditions with high cognitive strain or worker fatigue. Finally, we perform a cost-benefit analysis, supported by a nonparametric estimation and institutional information, which examines the viability of a potential welfare-improving policy to subsidize the closure of construction sites on highly polluted days.
    JEL: J01 I10 I15 J24 Q51 Q52 Q53
    Date: 2022–12
  4. By: Andrés César (CEDLAS - IIE-UNLP); Guillermo Falcone (CEDLAS - IIE-UNLP); Pablo Garriga (World Bank)
    Abstract: The last decades have witnessed a revolution in manufacturing production characterized by increasing technology adoption and a strong expansion of international trade. Simultaneously, the income distribution has exhibited both polarization and concentration among the richest. Combining datasets from the U.S. Census Bureau, the U.S. Internal Revenue Service, the International Federation of Robotics, and EU KLEMS, we study the causal effect of industrial automation on income inequality in the U.S. during 2010–2015. We exploit spatial and time variations in exposure to robots arising from past differences in industry specialization across U.S. metropolitan areas and the evolution of robot adoption across industries. We document a robust positive impact of robotics on income for only the top 1 percent of taxpayers, which is largest for top income fractiles. Therefore, industrial automation fuels income inequality and, particularly, top income inequality. According to our estimates, one more robot per thousand workers results in relative increments of the total taxable income accruing to fractiles P99 to P99.9, P99.9 to P99.99 and P99.99 to P100, of 2.1 percent, 3.8 percent and 6.4 percent, respectively. We also show that robotization leads to increased exports to high-income and upper-middle-income countries and that this is one of the key mechanisms behind the surge in top incomes.
    JEL: J23 J24 J31 O14 O33
    Date: 2022–12
  5. By: Hee-Seung Yang (Yonsei University); Booyuel Kim (Seoul National University); Rony Rodriguez-Ramirez (Yonsei University)
    Abstract: Business and skills training programmes have been a popular social policy intervention to improve the performance of self-employment in developing countries. We study the Small Business of the Family Economy programme, a government business training programme designed to assist Nicaraguan self-employed workers. Using data from three rounds of the Nicaragua Living Standards Measurement Survey, we employ a difference-in-differences strategy to exploit variation in eligibility for the programme across time and economic activity. Our estimates indicate that the programme does not increase self-employed workers’ income overall. However, we find heterogeneous treatment effects for female self-employed workers with low educational attainment, which could be explained by increased working months and having a second job.
    Keywords: self-employment, small business, business training, difference-in-differences, propensity score matching, Nicaragua.
    JEL: J24 O12 L26 M53
    Date: 2022–11
  6. By: Markus Nagler; Johannes Rincke; Erwin Winkler
    Abstract: Working from home (WFH) has become ubiquitous around the world. We ask how much workers actually value this job attribute. Using a stated-preference experiment, we show that German employees are willing to give up 7.7% of their earnings for WFH, but they value other job attributes more. For instance, the willingness-to-pay is 13.2% for reducing a commute of 45 to 15 minutes. WFH valuations are heterogeneous across workers and WFH substantially contributes to compensation inequality across education levels. Finally, valuations meaningfully interact with commuting distance and WFH reduces (but does not close) the gender gap in willingness-to-pay to avoid commuting.
    Keywords: working from home, working conditions, inequality, commuting, compensating wage differentials
    JEL: J20 J31 J33 J81
    Date: 2022
  7. By: Marco Fongoni (Aix-Marseille Univ, CNRS, AMSE, Marseille, France.)
    Abstract: This paper develops a theoretical framework to think about employees' effort choices, and applies this framework to assess the ability of existing laboratory designs to identify the effect of pay inequality on worker effort. The analysis shows that failure to control for a number of confounds-such as reciprocity towards the employer in multilateral gift-exchange games (vertical fairness), or the incentive to increase effort when feeling underpaid under piece rates (income targeting)-may lead to inaccurate interpretation of evidence of treatment effects. In light of these findings, the paper provides a set of recommendations on how to improve identification in the design of laboratory experiments in the future.
    Keywords: pay inequality; effort; laboratory experiments; reference dependence; fairness
    JEL: C91 D91 J31 J33 M52
    Date: 2022–12
  8. By: Damiano Pregaldini; Simone Balestra; Uschi Backes-Gellner
    Abstract: We study how two distinct dimensions of peer ethnic diversity (ethnic fractionalization and ethnic polarization) affect occupational choice. Using longitudinal administrative data and leveraging variation in ethnic composition across cohorts within schools, we find evidence for two opposing effects. Ethnic fractionalization increases the likelihood of students sorting into people-oriented occupations while ethnic polarization reduces this likelihood. Using data on social and cognitive skills, we provide evidence that exposure to higher levels of ethnic fractionalization enhances the students' formation of social skills and increases the likelihood of students sorting into people-oriented occupations where the returns to these skills are higher.
    Keywords: ethnic diversity, fractionalization, polarization, school, occupational choice
    JEL: H75 I21 J18 J24
    Date: 2022–12
  9. By: Montobbio, Fabio; Staccioli, Jacopo; Virgillito, Maria Enrica; Vivarelli, Marco
    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
  10. By: Simon M. Burgess; Shenila Rawal; Eric S. Taylor
    Abstract: We study teachers’ choices about how to allocate class time across different instructional activities, for example, lecturing, open discussion, or individual practice. Our data come from secondary schools in England, specifically classes preceding GCSE exams. Students score higher in math when their teacher devotes more class time to individual practice and assessment. In contrast, students score higher in English if there is more discussion and work with classmates. Class time allocation predicts test scores separate from the quality of the teacher’s instruction during the activities. These results suggest opportunities to improve student achievement without changes in teachers’ skills.
    JEL: I21 J24
    Date: 2022–11
  11. By: Sönke Hendrik Matthewes (University of Potsdam, Berlin School of Economics, London School of Economics); Guglielmo Ventura (London School of Economics, University College London)
    Abstract: Many countries consider expanding vocational curricula in secondary education to boost skills and labour market outcomes among non-university-bound students. However, critics fear this could divert other students from more profitable academic education. We study labour market returns to vocational education in England, where until recently students chose between a vocational track, an academic track and quitting education at age 16. Identification is challenging because self-selection is strong and because students’ next-best alternatives are unknown. Against this back- drop, we leverage multiple instrumental variables to estimate margin-specific treatment effects, i.e., causal returns to vocational education for students at the margin with academic education and, separately, for students at the margin with quitting education. Identification comes from variation in distance to the nearest vocational provider conditional on distance to the nearest academic provider (and vice-versa), while controlling for granular student, school and neighbourhood characteristics. The analysis is based on population-wide administrative education data linked to tax records. We find that the vast majority of marginal vocational students are indifferent be- tween vocational and academic education. For them, vocational enrolment substantially decreases earnings at age 30. This earnings penalty grows with age and is due to wages, not employment. However, consistent with comparative advantage, the penalty is smaller for students with higher revealed preferences for the vocational track. For the few students at the margin with no further education, we find merely tentative evidence of increased employment and earnings from vocational enrolment.
    Keywords: vocational education, returns to education, multi-valued treatment, instrumental variables
    JEL: I24 I28 J24
    Date: 2022–11
  12. By: Jose Maria Barrero (Instituto Tecnológico Autónomo de México); Nicholas Bloom (Stanford University); Steven J. Davis (University of Chicago Booth School of Business and Hoover Institution)
    Abstract: More than ten percent of Americans with recent work experience say they will continue social distancing after the COVID-19 pandemic ends, and another 45 percent will do so in limited ways. We uncover this Long Social Distancing phenomenon in our monthly Survey of Working Arrangements and Attitudes. It is more common among older persons, women, the less educated, those who earn less, and in occupations and industries that require many face-to-face encounters. People who intend to continue social distancing have lower labor force participation—unconditionally, and conditional on demographics and other controls. Regression models that relate outcomes to intentions imply that Long Social Distancing reduced participation by 2.5 percentage points in the first half of 2022. Separate self-assessed causal effects imply a reduction of 2.0 percentage points. The impact on the earnings-weighted participation rate is smaller at about 1.4 percentage points. This drag on participation reduces potential output by nearly one percent and shrinks the college wage premium. Economic reasoning and evidence suggest that Long Social Distancing and its effects will persist for many months or years.
    Keywords: Social distancing, infection worries, pandemic, labor force participation, potential output, college wage premium, self-assessed causal effects
    JEL: E24 J21 J22 J14 D12
    Date: 2022–10
  13. By: Clara Kögel (Université Paris 1 Panthéon Sorbonne – Centre d'Économie de la Sorbonne, Organisation de Coopération et de Développement Économiques (OCDE) – Directorate for Science, Technology and Industry (STI))
    Abstract: This paper investigates the effect of air pollution on labour productivity in French establishments in both manufacturing and non-financial market services sectors from 2001 to 2018. An instrumental variable approach based on planetary boundary layer height and wind speed allows identifying the causal effect of air pollution on labour productivity. The finding shows that a 10% increase in fine particulate matter leads, on average, to a 1.5% decrease in labour productivity, controlling for firm-specific characteristics and other confounding factors. The analysis also considers different dimensions of heterogeneity driving this adverse effect. The negative impact of pollution is mainly driven by service-intensive firms and sectors with a high share of highly skilled workers. This finding is in line with the expectation that air pollution affects cognitive skills, concentration, headache, and fatigue in non-routine cognitive tasks. Compared to the marginal abatement cost of PM 2.5 reductions by the Air Quality Directive 2008/50/EC, the estimated gains only from the labour productivity channel could largely offset the abatement cost. All in all, these estimates suggest that the negative impact of air pollution is much larger than previously documented in the literature.
    Keywords: Air pollution, Labour productivity, Planetary boundary layer height,
    JEL: J24 O13 Q53 Q51 Q52
    Date: 2022–12
  14. By: Peter Hinrichs
    Abstract: his paper studies the impacts of state appropriations on staffing and salaries at public higher education institutions in the United States using employment and revenue data from the Integrated Postsecondary Education Data System, along with an instrumental variables strategy borrowed from Deming and Walters (2018) and Chakrabarti, Gorton, and Lovenheim (2020). The instrument sidesteps the potential endogeneity of state appropriations for a given institution in a given year by interacting an institution’s historical reliance on state appropriations with total state appropriations for all higher education institutions in a given year. The results suggest that higher state appropriations are associated with an increase in tenure-track assistant professors at four-year institutions. They are also associated with an increase in part-time instructional staff at both four-year and two-year institutions. However, they are not associated with a change in the number of tenured faculty. Appropriations are also positively related to salaries for a variety of employee groups, although notably not for instructional staff who are instructors, lecturers, or without an academic rank. Overall, the results show that public higher education institutions use state appropriations in a variety of ways, but I do not find evidence that they replace contingent faculty with tenured or tenure-track faculty when appropriations rise.
    Keywords: contingent faculty; state appropriations
    JEL: H75 I23 J45
    Date: 2022–11–10
  15. By: Philipp Lentge (Leuphana Universität Lüneburg, Institut für Volkswirtschaftslehre)
    Abstract: This paper investigates the persistence and determinants of second job holding in Germany, especially marginal second jobs, following a legislative change allowing extensive dispensation of marginal second jobs from taxes and social security contributions. I document an upward trend in second job holding driven in particular by women. Moreover I find strong evidence for the persistence of second job holding using a dynamic panel model. Further, I identify significant gender differences in the decision to moonlight, where especially women in the lower part of the earnings distribution and women with few years of tenure are most likely to take up a second job.
    Keywords: second job, marginal second job, multiple job holding
    JEL: J22 J28
    Date: 2022–11
  16. By: Marielle Non (CPB Netherlands Bureau for Economic Policy Analysis); Jeroen van Honk (CWTS); Vince van Houten; Inge van der Weijden (CWTS); Thed van Leeuwen (CWTS)
    Abstract: Researchers who receive the Rubicon grant perform the same as comparable non-awarded applicants on a number of academic outcomes, such as the number of scientific publications and the citation score. The grant is aimed at starting researchers and finances a stay of maximum two years at a research institute outside the Netherlands. This allows them to acquire new contacts and ideas, which might increase their academic performance. However, our recent research finds no evidence for this. The research uses data from the Dutch Research Council NWO on applicants for the Rubicon grant. Because NWO has limited budgets, only the most promising applicants can be granted. This allows us to compare applicants who just were awarded with applicants who were just not awarded. We study the probability that the researcher stops publishing, the number of publications, the citation score and the number of co-authors in the five years following the grant application. We find no significant differences between awarded and non-awarded applicants.
    JEL: J4 D8
    Date: 2022–12

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