nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2023‒01‒09
thirty-six papers chosen by
Joseph Marchand
University of Alberta

  1. The Impact of ICT and Robots on Labour Market Outcomes of Demographic Groups in Europe By Albinowski, Maciej; Lewandowski, Piotr
  2. Piecework and Job Search in the Platform Economy By Cantarella, Michele; Strozzi, Chiara
  3. Commitment and the Dynamics of Household Labor Supply By Theloudis, Alexandros; Velilla, Jorge; Chiappori, Pierre-André; Gimenez-Nadal, J. Ignacio; Molina, José Alberto
  4. Preferences, Inequities, and Incentives in the Substitute Teacher Labor Market By Matthew A. Kraft; Megan Lane Conklin; Grace T. Falken
  5. Performance-related Pay and the UK Gender Pay Gap By Jones, Melanie; Kaya, Ezgi
  6. Wage and employment impact of minimum wage: evidence from Lithuania By Jose Garcia-Louzao; Linas Tarasonis
  7. High-Pressure, High-Paying Jobs? By Markus Nagler; Johannes Rincke; Erwin Winkler
  8. Can Temporary Wage Incentives Increase Formal Employment? Experimental Evidence from Mexico By Abel, Martin; Carranza, Eliana; Geronimo, Kimberly; Ortega, Maria Elena
  9. Automation with heterogeneous agents: The effect on consumption inequality By Santini, Tommaso
  10. Does Ethnic Diversity in Schools Affect Occupational Choices? By Pregaldini, Damiano; Balestra, Simone; Backes-Gellner, Uschi
  11. CFO Working Experience and Tax Avoidance By Panagiotis Karavitis; Pantelis Kazakis; Tianyue Xu
  12. The empirics of technology, employment and occupations: lessons learned and challenges ahead By Fabio Montobbio; Jacopo Staccioli; Maria Enrica Virgillito; Marco Vivarelli
  13. Hours Inequality By Checchi, Daniele; Garca-Peñalosa, Cecilia; Vivian, Lara
  14. Commitment and the Dynamics of Household Labor Supply By Alexandros Theloudis; Jorge Velilla; Pierre-André Chiappori; J. Ignacio Gimenéz-Nadal; José Alberto Molina
  15. The Possible Implications of the Green Transition for the EU Labour Market By Anneleen Vandeplas; Istvan Vanyolos; Mauro Vigani; Lukas Vogel
  16. The Social Tax: Redistributive Pressure and Labor Supply By Carranza, Eliana; Donald, Aletheia; Grosset, Florian; Kaur, Supreet
  17. The Gender Pay Gap in the CEOs' Labor Market By Tani, Massimiliano; Valentine, Andrew; Sharpe, Kieran
  18. Staggered Contracts and Unemployment during Recessions By Adamopoulou, Effrosyni; Díez-Catalán, Luis; Villanueva, Ernesto
  19. Policies to increase youth employment in Korea By Randall S. Jones; Jinwoan Beom
  20. Productivity and Wages: What Was the Productivity-Wage Link in the Digital Revolution of the Past, and What Might Occur in the AI Revolution of the Future? By Edward Lazear; Kathryn L. Shaw; Grant E. Hayes; James M. Jedras
  21. The Perverse Effect of Flexible Work Arrangements on Informality By di Porto, Edoardo; Garibaldi, Pietro; Mastrobuoni, Giovanni; Naticchioni, Paolo
  22. Air Pollution and Entrepreneurship By Guo, Liwen; Cheng, Zhiming; Tani, Massimiliano; Cook, Sarah; Zhao, Jiaqi; Chen, Xi
  23. How Substitutable Are Workers? - Evidence from Worker Deaths By Jäger, Simon; Heining, Jörg
  24. Wage Transparency and the Gender Pay Gap: A Survey By Bennedsen, Morten; Larsen, Birthe; Wei, Jiayi
  25. Telework during the Pandemic: Patterns, Challenges, and Opportunities for People with Disabilities By Ameri, Mason; Kruse, Douglas L.; Park, So Ri; Rodgers, Yana van der Meulen; Schur, Lisa
  26. Housing Demolition and Occupational Mobility: Evidence from China By Wang, Chuhong; Wang, Yonghua; Liu, Xingfei; Zhong, Jiatong
  27. Choice over Payment Schemes and Worker Effort By Abel, Martin; Burger, Rulof
  28. Mental health and productivity: evidence for the UK By Dacheng Huo; Nigel Rice; Jennifer Roberts; Cristina Sechel
  29. Do College Admissions Criteria Matter? Evidence from Discretionary vs. Grade-Based Admission Policies By Kamis, Rais; Pan, Jessica; Seah, Kelvin
  30. Endogenous labour supply and negative economic shocks in a large scale spatial CGE model of the European Union By Martin Christensen; Damiaan Persyn
  31. Robust Inference for the Frisch Labor Supply Elasticity By Michael Keane; Timothy Neal
  32. Job Insecurity and Health: Evidence from Older European Workers By Suari-Andreu, Eduard; Schwartz, Tim; van Lent, Max; Knoef, Marike
  33. Can Treatment with Medications for Opioid Use Disorder Improve Employment Prospects? Evidence from Rhode Island Medicaid Enrollees By Mary A. Burke; Riley Sullivan
  34. Industrial Clusters in the Long Run: Evidence from Million-Rouble Plants in China By Stephan Heblich; Marlon Seror; Hao Xu; Yanos Zylberberg
  35. The Labor Market in Ukraine: Rebuild Better By Anastasia, Giacomo; Boeri, Tito; Kudlyak, Marianna; Zholud, Oleksandr
  36. Inflation in Japan: Changes during the Pandemic and Issues for the Future By Shuichiro Ikeda; Haruhiko Inatsugu; Yui Kishaba; Takuji Kondo; Kenichi Sakura; Kosuke Takatomi; Takashi Nakazawa; Kotone Yamada

  1. By: Albinowski, Maciej (Institute for Structural Research (IBS)); Lewandowski, Piotr (Institute for Structural Research (IBS))
    Abstract: We study the age- and gender-specific labour market effects of two key modern technologies, Information and Communication Technologies (ICT) and robots, in 14 European countries between 2010 and 2018. To identify the causal effects of technology adoption, we utilise the variation in technology adoption between industries and apply the instrumental variables strategy proposed by Acemoglu and Restrepo (2020). We find that the exposure to ICT and robots increased the shares of young and prime-aged women in employment and the wage bills of particular sectors, but reduced the shares of older women and prime-aged men. The adverse effects were particularly pronounced for older women in cognitive occupations, who had relatively low ICT-related skills; and for young men in routine manual occupations, who experienced substitutions by robots. Between 2010 and 2018, the growth in ICT capital played a much larger role than robot adoption in the changes in the labour market outcomes of demographic groups.
    Keywords: technological change, automation, ICT, robots, employment, wages, Europe
    JEL: J24 O33 J23
    Date: 2022–11
  2. By: Cantarella, Michele (University of Helsinki); Strozzi, Chiara (University of Modena and Reggio Emilia)
    Abstract: The massive growth of jobs in the platform economy has reignited a long-standing debate on the wage elasticity of labour supply for the self-employed. Overwhelming empirical evidence seems to suggest that workers in the platform economy will work more hours than they wish to, for a lower wage, suggesting a backward-bending labour supply curve. Is this puzzling outcome explained by target earning behaviour or rather by the uncertainty arising from task search? In this paper, we test these hypotheses making use of new data on on-location and online platform workers earning on a piece-rate basis in the EU, exploiting search shocks in a difference-in-differences strategy to reassess the wage elasticity of labour supply. We find that uncertainty in search plays a central role in inflating hours of work, revealing a positive and inelastic wage elasticity for all platform workers. On average, a percentage increase in job search leads to a net loss in income, suggesting that piecework might be an endemic source of demand surplus for monopsonistic markets.
    Keywords: platform economy, piecework, self-employment, job search, labour supply
    JEL: J22 J32 J33 J42
    Date: 2022–12
  3. By: Theloudis, Alexandros (Tilburg University); Velilla, Jorge (University of Zaragoza); Chiappori, Pierre-André (Columbia University); Gimenez-Nadal, J. Ignacio (University of Zaragoza); Molina, José Alberto (University of 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
  4. By: Matthew A. Kraft; Megan Lane Conklin; Grace T. Falken
    Abstract: We examine the labor supply decisions of substitute teachers – a large, on-demand market with broad shortages and inequitable supply. In 2018, Chicago Public Schools implemented a targeted bonus program designed to reduce unfilled teacher absences in largely segregated Black schools with historically low substitute coverage rates. Using a regression discontinuity design, we find that incentive pay substantially improved coverage equity and raised student achievement. Changes in labor supply were concentrated among Black and Hispanic substitutes from nearby neighborhoods with experience in incentive schools. Wage elasticity estimates suggest incentives would need to be 50% of daily wages to close fill-rate gaps.
    JEL: I21 I24 J23 J33
    Date: 2022–12
  5. By: Jones, Melanie; Kaya, Ezgi
    Abstract: This paper explores the role of performance-related pay to the UK gender pay gap at the mean and across the earnings distribution. Applying decomposition methods to data from the Annual Survey of Hours and Earnings, we find that performance-related pay is an important but neglected factor, with the lower probability of females being employed in performance-related pay jobs explaining 12 per cent of the observed mean gender pay gap and making a larger contribution than many work-related characteristics routinely included in studies of this nature. Driven by its influence in the private sector, employment in performance-related pay jobs is more important in explaining the gender pay gap at the top end of the wage distribution, consistent with gender differences in receipt of bonus payments. Gender differences in the reward to performance-related pay jobs have a further, but more modest, role in widening the national and private sector mean gender pay gap.
    Keywords: gender pay gap, performance-related pay, earnings distribution, sector
    JEL: J31 J33 J45 J71
    Date: 2022
  6. By: Jose Garcia-Louzao (Lietuvos Bankas; Vilniaus Universitetas); Linas Tarasonis (Lietuvos Bankas; Vilniaus Universitetas)
    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
  7. By: Markus Nagler; Johannes Rincke; Erwin Winkler
    Abstract: Work-related stress has reportedly increased over time. Using worker-level survey data, we build a measure of work pressure strongly associated with adverse health outcomes. In line with theories of compensating differentials, work pressure comes with a sizable earnings premium, even within narrowly defined occupations. As expected, we find no premium among civil servants who face strong labor market frictions. In complementary stated-choice experiments, we uncover a substantial willingness-to-pay to avoid work pressure. Our evidence is consistent with workers sorting into high- and low-pressure jobs. Differences in the prevalence and valuation of work pressure explain a substantial share of wage inequality.
    Keywords: work pressure, compensating differentials, working conditions, wage inequality, health
    JEL: I10 I31 J20 J31 J32 J81 M52
    Date: 2022
  8. By: Abel, Martin (Bowdoin College); Carranza, Eliana (World Bank); Geronimo, Kimberly (Labor Mobility Partnerships); Ortega, Maria Elena (World Bank)
    Abstract: Formal sector entry-level jobs in Mexico offer low starting salaries but substantial wage growth. This paper experimentally tests whether a six-months wage incentive can increase formal employment among secondary school graduates. Combining survey and high-frequency social security data, the paper shows that the incentive increases formal employment among vocational school graduates by 4.2 percentage points (14.5 percent) over the first two years driven by a 5 percentage point (25 percent) increase in permanent formal jobs. These employment gains are due to both extensive and intensive margin effects. Treatment effects are concentrated among youths with binding reservation wages who also tend to underestimate formal wage growth.
    Keywords: youth employment, wage subsidy, formal employment, reservation wages
    JEL: J08 J24 J41 J46 J63
    Date: 2022–11
  9. By: Santini, Tommaso
    Abstract: In this paper, I study technological change as a candidate for the observed increase in consumption inequality in the United States. I build an incomplete market model with educational choice combined with a task-based model on the production side. I consider two channels through which technology affects inequality: the skill that an agent can supply in the labor market and the level of capital she owns. In a quantitative analysis, I show that (i) the model replicates the increase in consumption inequality between 1981 and 2008 in the US (ii) educational choice and the return to wealth are quantitatively important in explaining the increase in consumption inequality.
    Keywords: automation,factor shares,inequality,productivity,tasks,technological change
    JEL: D63 J23 J24 O14 O31 O33
    Date: 2022
  10. By: Pregaldini, Damiano (University of Zurich); Balestra, Simone (University of St. Gallen); Backes-Gellner, Uschi (University of Zurich)
    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
  11. 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
  12. By: Fabio Montobbio (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italy – BRICK, Collegio Carlo Alberto, Torino, Italy – ICRIOS, Bocconi University, Milano, Italy); Jacopo Staccioli (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italy – Institute of Economics, Scuola Superiore Sant’Anna, Pisa, Italy); Maria Enrica Virgillito (Institute of Economics, Scuola Superiore Sant’Anna, Pisa, Italy – Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italy); Marco Vivarelli (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italy – UNU-MERIT, Maastricht, The Netherlands – IZA, Bonn, Germany)
    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
  13. By: Checchi, Daniele (University of Milan); Garca-Peñalosa, Cecilia (Aix Marseille University); Vivian, Lara (European Commission)
    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
  14. By: Alexandros Theloudis (Tilburg University); Jorge Velilla (University of Zaragoza); Pierre-André Chiappori (Columbia University); J. Ignacio Gimenéz-Nadal (University of Zaragoza); José Alberto Molina (University of 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 nd strong evidence for limited commitment.
    Keywords: household behavior, intertemporal choice, commitment, collective model, family labor supply, wages, PSID
    JEL: D12 D13 D15 J22 J31
    Date: 2022–11
  15. By: Anneleen Vandeplas; Istvan Vanyolos; Mauro Vigani; Lukas Vogel
    Abstract: With policy ambitions at an all-time high, the green transition is set to accelerate over the next decade and trigger significant structural change in EU labour markets. While aggregate employment impacts of the green transition may remain contained, shifts are likely to occur between sectors, firms, occupations, and regions. This calls for policymakers to anticipate and address the distributional risks of climate policy. Three types of jobs (‘green’, ‘white’ and ‘brown’) are distinguished that would be differently affected. Brown jobs would be most negatively affected. While on aggregate, their share is relatively small, impacts may be concentrated in sectors and regions. As the ease of labour reallocation will crucially depend on the similarity of location and skills of the jobs that are newly created, demographic characteristics of workers in brown sectors are discussed. It is argued that with the right policy support, transition costs can be mitigated, particularly at the current juncture, where abour markets are tight. At the same time, regional socio-economic specificities need to be accounted for. Policy action should focus on providing inclusive social protection, education and training, individualised re-employment support, temporary job subsidies, and effective regional development policy. Acting in anticipation can improve policy effectiveness. Lessons should be drawn from past structural transformations aimed at economic diversification. At the same time, care should be taken to counter political backlash against climate policies based on job-killing arguments with evidence of positive employment effects in well-managed cases and clear communication on policy strategies to address distributional consequences.
    JEL: J21 J23 J24 L52 Q28
    Date: 2022–12
  16. By: Carranza, Eliana (World Bank); Donald, Aletheia (World Bank); Grosset, Florian (Columbia University); Kaur, Supreet (University of California, Berkeley)
    Abstract: In low-income communities in both rich and poor countries, redistributive transfers within kin and social networks are frequent. Such arrangements may distort labor supply—acting as a "social tax" that dampens the incentive to work. We document that across countries, from Cote d'Ivoire to the United States, social groups that undertake more interpersonal transfers work fewer hours. Using a field experiment, we enable piece-rate factory workers in Côte d'Ivoire to shield income using blocked savings accounts over 3-9 months. Workers may only deposit earnings increases, relative to baseline, mitigating income effects on labor supply. We vary whether the offered account is private or known to the worker's network, altering the likelihood of transfer requests against saved income. When accounts are private, take-up is substantively higher (60% vs. 14%). Offering private accounts sharply increases labor supply— raising work attendance by 10% and earnings by 11%. Outgoing transfers do not decline, indicating no loss in redistribution. Our estimates imply a 9-14% social tax rate. The welfare benefits of informal redistribution may come at a cost, depressing labor supply and productivity.
    Keywords: kin tax, informal insurance, illiquid savings, transfers, labor supply
    JEL: J22 J24 H24 D61 O12
    Date: 2022–11
  17. By: Tani, Massimiliano (University of New South Wales); Valentine, Andrew (UNSW Sydney); Sharpe, Kieran
    Abstract: We study the gender pay gap in the labor market for CEOs by analysing 1,174 outsider CEO successions over the past three decades across 18 countries. We find that male and female CEOs receive a similar compensation overall but this masks marked gender differences in the pay structure: namely, women CEOs receive a lower proportion of fixed to total compensation than comparable men. We interpret this outcome as the result of gendered risk preferences, which exacerbate the pay gap when there is bargaining over pay, and contribute a theoretical model of the CEO labor market to formalise this intuition. The model also suggests that a more balanced gender composition in companies' boards can help women close the gap in pay structure—an hypothesis that is empirically supported in our data.
    Keywords: CEO compensation, women CEOs, board diversity, corporate governance
    JEL: J16 J31 G39 M59
    Date: 2022–12
  18. By: Adamopoulou, Effrosyni (University of Mannheim); Díez-Catalán, Luis (BBVA Research); Villanueva, Ernesto (Bank of Spain)
    Abstract: This paper studies the impact of downward wage rigidity on wage dynamics and employment flows after the outbreak of major recessions over the last 30 years in Spain. Downward wage rigidity stems from collective agreements, which set province-industry-skill specific minimum wage floors for all workers. We show that agreements signed after the onset of the 1993 and 2009 recessions settled on average for a 1.0-1.5 pp lower nominal wage growth than the agreements signed before. By exploiting variation in the renewal of collective contracts and leveraging Social Security data and the distribution of the worker-level bite of minimum wage floors, we find that in both recessions actual wage growth was indeed higher among workers covered by collective contracts signed during expansions and with wages close to the floors. However, employment responses vary across recessions. In the low-inflation recession of 2009, job losses are highly persistent and entirely driven by workers with pre-recession wages close to the minimum wage floors while in the high inflation recession of 1993, job losses were limited and short-lived. Using Labour Force Survey data in a similar setting we find that downward wage rigidity during the first year of the COVID-19 pandemic triggered adjustments at the intensive margin of labor (short time work). Our findings highlight the interplay between rigidity at different parts of the wage distribution, macroeconomic environment and labor market institutions and identify conditions under which collective contract staggering and the inability to renegotiate may amplify aggregate shocks.
    Keywords: labor demand, collective bargaining, wage rigidity, staggering, minimum wages, social security data, inflation
    JEL: J23 J31 J50
    Date: 2022–12
  19. By: Randall S. Jones; Jinwoan Beom
    Abstract: Korea’s low youth employment rate has negative consequences for the young people concerned and the economy as a whole. Raising youth employment is a priority, particularly as Korea faces the most rapid population ageing among OECD countries. Low youth employment is due to a mismatch between education and the labour market, reflecting a large skill gap between highly-educated youth who race for credentials to secure attractive careers and older workers retiring from jobs that require less human capital. The share of university graduates among young Koreans is the highest in the OECD, but their employment rate is relatively low even as small firms confront serious labour shortages. Dualism in the labour market (between regular and non-regular workers) and the product market (between small and large firms) encourages young people to queue for jobs in large firms and the public sector to avoid low-wage precarious jobs. Raising the youth employment rate requires breaking down dualism while reforming the education system. Vocational education in secondary schools, which has shrunk while becoming another route to tertiary education, should be improved to make it a direct path to employment. Expanding the approach of Meister schools and the work-learning dual programme would help in that regard. Tertiary education should become more flexible and responsive to the demands of employers. Active labour market policies should focus less on direct job creation and more on job placement and training.
    Keywords: education, employment policies, Korea, labour market, labour market dualism, Meister schools, mismatch, NEETs, non-regular workers, product market dualism, SMEs, youth employment
    JEL: I24 J08 J21 J31 I28
    Date: 2022–12–16
  20. By: Edward Lazear; Kathryn L. Shaw; Grant E. Hayes; James M. Jedras
    Abstract: Wages have been spreading out across workers over time – or in other words, the 90th/50th wage ratio has risen over time. A key question is, has the productivity distribution also spread out across worker skill levels over time? Using our calculations of productivity by skill level for the U.S., we show that the distributions of both wages and productivity have spread out over time, as the right tail lengthens for both. We add OECD countries, showing that the wage-productivity correlation exists, such that gains in aggregate productivity, or GDP per person, have resulted in higher wages for workers at the top and bottom of the wage distribution. However, across countries, those workers in the upper income ranks have seen their wages rise the most over time. The most likely international factor explaining these wage increases is the skill-biased technological change of the digital revolution. The new AI revolution that has just begun seems to be having a similar skill-biased effects on wages. But this current AI, called “supervised learning,” is relatively similar to past technological change. The AI of the distant future will be “unsupervised learning,” and it could eventually have an effect on the jobs of the most highly skilled.
    JEL: J00 J30 M50
    Date: 2022–12
  21. By: di Porto, Edoardo (University of Naples Federico II); Garibaldi, Pietro (Collegio Carlo Alberto); Mastrobuoni, Giovanni (Collegio Carlo Alberto); Naticchioni, Paolo (Roma Tre University)
    Abstract: Flexible work arrangements are on the rise in many countries, ranging from Germany's mini-jobs to UK's zero-hours contracts. These contracts allow for quick labor demand adjustments and are also seen as a way to discourage undeclared work, and more than 10 years ago Italy introduced what was arguably one of the most exible alternative work arrangements: "labor vouchers". The labor vouchers could be easily purchased to pay for occasional work, with no additional paper work. Between 2008 and 2016 the number of 10-euro labor vouchers purchased in a year went up from 500,000 (less than 1 per 100 inhabitants) to almost 300 million (about 5 times the Italian population). Using random timing in labor inspections, as well as the abolition of labor vouchers, we document a perverse effect of badly designed alternative work arrangements: they severely disrupt the work of labor inspectors, allowing firms to increase the amount of undeclared work. Firms who use vouchers for this purpose are shown to hire more regular part-time and fixed-term workers when vouchers become unavailable.
    Keywords: informality, labor vouchers, flexible work arrangements, occasional work, zero-hour contracts
    JEL: J23 H26
    Date: 2022–12
  22. By: Guo, Liwen; Cheng, Zhiming; Tani, Massimiliano; Cook, Sarah; Zhao, Jiaqi; Chen, Xi
    Abstract: We examine the causal effect of air pollution on an individual's propensity for entrepreneurship in China. Our preferred model, which employs an instrumental variable approach to address endogeneity arising from sorting into entrepreneurship and locational choices, suggests that exposure to higher intensity of air pollution lowers one's proclivity for entrepreneurship. A one standard deviation increase in air pollution leads to a 21.2% decrease in the propensity for entrepreneurship. We also find that self-efficacy is a channel in the relationship between air pollution and entrepreneurship. In addition, education moderates the relationship between air pollution and self-efficacy.
    Keywords: Air pollution,Entrepreneurship,China
    JEL: J24 L26 Q53
    Date: 2022
  23. By: Jäger, Simon (Massachusetts Institute for Technology (MIT) ; IZA); Heining, Jörg (Institute for Employment Research (IAB), Nuremberg, Germany ; IZA)
    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." (Author's abstract, IAB-Doku) ((en))
    Keywords: IAB-Open-Access-Publikation
    JEL: J20 J30 J63
    Date: 2022–12–12
  24. By: Bennedsen, Morten (University of Copenhagen); Larsen, Birthe (Department of Economics, Copenhagen Business School); Wei, Jiayi (INSEAD)
    Abstract: We survey the literature on the effects of increased transparency of gender segregated wages on the pay gap between men and women in comparable jobs. Pay transparency is promoted by countries and supra-national institutions and we categorise reforms according to their content and coverage. A growing number of papers have used variations of difference-in-difference estimation methods to analyse the impact of reforms on the gender pay gap (GPG), and from these we extract four main findings: First, reform-based studies find that pay transparency reforms reduce the GPG in all countries but one, which finds no effect. Second, in Canada, Denmark and the UK, the reduction in the GPG from transparency reforms originate from a reduction in the growth rate of male income and less from an increase in women’s pay. Third, there is fragmented evidence for the impact of transparency reforms on other labour outcomes and firm productivity. Fourth, the monetary implementation cost of transparency reforms is, in general, small both for individual firms and public administration. These finding are consistent with the notion that gender wage transparency reforms are an effective policy tool to reduce the GPG.
    Keywords: Wage Transparency; Gender Pay Gap; Policy Reforms
    JEL: J16 J31 J38
    Date: 2022–11–19
  25. By: Ameri, Mason (Rutgers University); Kruse, Douglas L. (Rutgers University); Park, So Ri (Rutgers University); Rodgers, Yana van der Meulen (Rutgers University); Schur, Lisa (Rutgers University)
    Abstract: Telework has benefits for many people with disabilities. The pandemic may create new employment opportunities for people with disabilities by increasing employer acceptance of telework, but this crucially depends on the occupational structure. We compare people with and without disabilities in the expansion of telework as the pandemic began, and the evolution of telework during the pandemic. We use U.S. data from the American Community Survey from 2008 to 2020 and the Current Population Survey over the May 2020 to April 2022 period. Prevalence and trends are analyzed using linear probability and multinomial logit regressions. While workers with disabilities were more likely than those without disabilities to telework before the pandemic, they were less likely to telework during the pandemic. The occupational distribution accounts for most of this difference. Tight labor markets, as measured by state unemployment rates, particularly favor people with disabilities obtaining telework jobs. While people with cognitive/mental health and mobility impairments were the most likely to telework during the pandemic, tight labor markets especially favored the expansion of telework for people with vision impairments and difficulty with daily activities inside the home. Many people with disabilities benefit from working at home, and the pandemic has increased employer acceptance of telework, but the current occupational distribution limits this potential. Tighter labor markets during the recovery offer hope that employers will increasingly hire people with disabilities in both telework and non-telework jobs. Disability, employment, telework, pandemic, flexibility.
    Keywords: disability, employment, telework, COVID-19, flexibility
    JEL: J14 J22 J71
    Date: 2022–11
  26. By: Wang, Chuhong (Yango University); Wang, Yonghua (Yango University); Liu, Xingfei (University of Alberta); Zhong, Jiatong (University of Alberta)
    Abstract: We identify the causal impact of housing demolition on employment and occupational mobility of working-age individuals in China. We exploit housing demolition events as a quasi-natural experiment and apply a two-way fixed effects approach to overcome the potential endogeneity problem. Using data from the CHFS, we find that on the extensive margin, housing demolition creates skill waste by making individuals less likely to work; while on the intensive margin, housing demolition leads to occupational upward mobility, especially among low-skilled workers. We do not find any empirical evidence that housing demolition influences internal migration flow or migrant workers' occupational mobility.
    Keywords: housing demolition, occupational mobility, skill, migrant, China
    JEL: J24 J62
    Date: 2022–11
  27. By: Abel, Martin (Bowdoin College); Burger, Rulof (Stellenbosch University)
    Abstract: We study the effect of monetary incentives on effort in a prosocial task: writing letters encouraging voter turnout. Volunteers are randomized to receive no incentive, unconditional upfront payment, payment conditional on completing the task, or to have a choice between the two payment schemes. The unconditional and conditional payment both increase task completion rates by about 18 percentage points (43%). Giving people a choice between the payment scheme doubles the effect on task completion (35 p.p., 84%). Unlike unconditional payments, a choice over contracts also increases time spent on the task and letter quality. Survey responses suggest that giving people a choice is effective because it increases task ownership rather than the desire to return a favor or avoid feelings of guilt.
    Keywords: self determination, gift exchange, guilt aversion, labor supply
    JEL: D86 D91 J22
    Date: 2022–12
  28. By: Dacheng Huo (Centre for Health Economics, University of York, UK); Nigel Rice (Centre for Health Economics, Department of Economics and Related Studies, University of York, UK); Jennifer Roberts (Department of Economics, University of Sheffield, UK); Cristina Sechel (Department of Economics, University of Sheffield, UK)
    Abstract: Understanding the drivers of productivity is fundamental to securing future wellbeing, but there are still large gaps in our knowledge concerning the relationship between productivity and the health of the labour force. We explore whether changes in mental health contribute to changes in labour market productivity. We exploit the COVID-19 modules of the UK Household Longitudinal Study, which include a direct (self-reported) measure of productivity change relative to pre-COVID levels, as well as a clinically validated measure of mental health. To overcome endogeneity problems we use an instrumental variable approach implemented in an ordered probit model using two-stage residual inclusion. Our results show a strong positive relationship between mental health and productivity. At an individual level a unit decrease in mental health leads to an expected loss in productivity of approximately 4 minutes per working day. In our sample the average decrease in mental health over the period we study is -1.675, which predicts a reduction in productivity of 2,531 minutes for each hour that the sample works. Scaled up to the entire population of workers in June 2020, then total productivity losses would have been substantial.
    Keywords: mental health, productivity, work from home, COVID-19, UKHLS
    JEL: I12 J14 J24
    Date: 2022–12
  29. By: Kamis, Rais (National University of Singapore); Pan, Jessica (National University of Singapore); Seah, Kelvin (National University of Singapore)
    Abstract: This paper examines the implications of college admissions criteria on students' academic and non-academic performance in university and their labor market outcomes. We exploit a unique feature of the admissions system at a large university that has two admission tracks – a regular admission track where admission is based exclusively on academic performance and a discretionary admission (DA) track where applicants can instead gain admission on the basis of demonstrated non-academic qualities. Comparing students admitted through each track, we find that DA students fare similarly in terms of academic performance in university as marginal students admitted through the regular route. However, they are significantly more likely to be involved in optional academic and non-academic college activities and earn substantially higher labor market earnings up to three years after graduation. These results are not driven by the DA process differentially selecting students on the basis of family background or unobserved academic ability.
    Keywords: college selection, higher education, non-academic skills
    JEL: I21 I23 J31
    Date: 2022–11
  30. By: Martin Christensen (World Bank); Damiaan Persyn (Thünen Institute)
    Abstract: We introduce endogenous labour supply decisions with an extensive and intensive margin in a regional computational general equilibrium model. We show that endogenising labour supply generates an additional economic loss compared to a model with fixed labour supply. Both the intensive margin and the extensive margin contribute to the higher cumulative loss in employment, consumption and GDP. A first insight from the general equilibrium framework is that the response at the external margin of labour supply is larger than what could be expected from considering wage elasticities alone, due to discouraged individuals choosing to stay out of the labour market in face of higher unemployment and a lower probability of finding a job. More insights are provided by the unique extensive regional dimension of our model. We show that country-level results hide substantial heterogeneity at the regional level. The results carry important lessons for macro-economic models used for policy evaluation: economic effects may be underestimated by models with fixed labour supply or models considering only the intensive margin of labour supply. Aggregate country level estimates may hide large differences in effects observed at the regional level.
    Keywords: General equilibrium modelling, labour supply, regional economics.
    JEL: C68 D58 J20
    Date: 2022–12
  31. By: Michael Keane (School of Economics); Timothy Neal (UNSW School of Economics)
    Abstract: The Frisch labor supply elasticity plays a key role in many policy debates, but its magnitude remains controversial. Many studies use 2SLS regressions of hours changes on wage changes to estimate the Frisch elasticity. But a little appreciated power asymmetry property of 2SLS causes estimates to appear (spuriously) imprecise when they are shifted away from the OLS bias. This makes it difficult for a 2SLS t-test to detect a true positive Frisch elasticity. We illustrate this problem in an application to NLSY97 data. We obtain a Frisch estimate of 0.60 for young men, but the t-test indicates it is insignificant. In contrast, the Anderson-Rubin (AR) test – which avoids the power asymmetry problem – implies the estimate is highly significant. The same power asymmetry issue that afflicts the t-test here will arise in many IV applications. Thus, we argue the AR test should be widely adopted in lieu of the t-test.
    Keywords: Frisch elasticity, labor supply, weak instruments, 2SLS, Anderson-Rubin test, LIML, Continuously Updated GMM
    JEL: J22 D15 C12 C26
    Date: 2022–12
  32. By: Suari-Andreu, Eduard (University of Leiden); Schwartz, Tim (SEO Amsterdam); van Lent, Max (Leiden University); Knoef, Marike (Leiden University)
    Abstract: A rich literature has studied the effect of job insecurity on health. However the causal link between these two variables remains unclear. We study the relationship between perceived job insecurity and health using longitudinal data on around 30 thousand older workers from 20 European countries covering a period of 14 years. The unprecedented size and nature of the dataset compared to previous studies on job insecurity and health allows us to apply different estimation methods and compare the results obtained. We do so using a wide range of health outcomes that include objective and subjective measures. Using pooled OLS, we estimate a strong association between job insecurity and health outcomes. A fixed effect estimator yields precisely estimated zeros with the exception of a few mental conditions. Additionally, we test the robustness of an IV strategy that uses an index for employment protection legislation (EPL) as an instrument for job insecurity. We conclude that the direct causal link between job insecurity and health for older workers is in any case rather weak and discuss several reasons for our findings.
    Keywords: job insecurity, health, older workers, employment protection legislation
    JEL: I10 I18 J28 J81
    Date: 2022–11
  33. By: Mary A. Burke; Riley Sullivan
    Abstract: The nation’s long-standing crisis of opioid abuse intensified during the COVID-19 pandemic, with opioid-related deaths rising to nearly 81, 000 in 2021, an increase of more than 60 percent from just two years earlier. Also during the pandemic, the labor force participation rate in the United States fell precipitously, and as of September 2022 it remained depressed by more than a full percentage point relative to its February 2020 level despite record numbers of job openings in 2021 and 2022. The unfortunate confluence of labor shortages and record-setting opioid mortality highlights the need to better understand the relationship between opioid use and employment and prompts the question of whether effective medications for opioid use disorder (OUD), which have been shown to save lives, might also help to bolster the employment prospects of OUD patients and reduce the economic burden of OUD on society. This report, focused on Medicaid enrollees in the state of Rhode Island, seeks to answer that question. It presents two primary findings. First, the results show that individuals diagnosed with OUD are less likely to be employed compared with other Medicaid enrollees and that their employment tends to be more intermittent; further analysis shows that these differences do not merely reflect other fixed factors affecting employment that might be common among individuals with OUD. Second, the report finds that OUD patients treated with the medication buprenorphine experience increased job-finding rates, especially in the period shortly after they first start taking the medication. These results, while modest in magnitude, suggest that the same treatment protocol already shown to prevent overdoses and save lives also holds promise for helping OUD patients return to work. On the other hand, treatment with methadone (another medication approved for OUD by the US Food and Drug Administration) is not associated with any significant increase in the job-finding rate among OUD patients. The contrasting results for buprenorphine versus methadone point to the fact that patients treated with methadone tend to have more severe opioid use disorders and may face additional barriers to employment compared with those treated with buprenorphine. This report uses a unique data set that links payroll employment records with information on medical diagnoses and health-care utilization among Medicaid enrollees in Rhode Island. The state of Rhode Island represents an appropriate context for studying the relationships between opioid use, employment, and treatment. In 2020, the state’s age-adjusted opioid-related mortality rate was the 10th highest in the United States, according to data from the Centers for Disease Control and Prevention, and Medicaid enrollees accounted for a disproportionate share of those deaths. Rhode Island has been a pioneer in tackling the opioid crisis, and it recently became the first state in the nation to deploy a mobile methadone van to serve neighborhoods lacking a specialty treatment facility.
    Keywords: opioid use disorder; employment; job-finding rate; buprenorphine; methadone; Medicaid; Rhode Island
    JEL: I12 I18 J21 J24
    Date: 2022–12–01
  34. By: Stephan Heblich; Marlon Seror; Hao Xu; Yanos Zylberberg
    Abstract: We identify negative spillovers exerted by large, successful manufacturing plants on other local production facilities in China. A short-lived alliance between the U.S.S.R. and China led to the construction of 150 "Million-Rouble plants" in the 1950s. Our identification strategy exploits the ephemeral geopolitical context and the relative position of allied and enemy airbases to isolate exogenous variation in plant location decisions. We find a boom-and-bust pattern in hosting counties: treated counties are twice as productive as control counties in 1982, but 30% less productive in 2010. The average other establishment in treated counties is unproductive, does not innovate, and charges high markups. We find that (over)specialization limits technological spillovers. This prevents the emergence of new industrial clusters and leads to a flight of entrepreneurs.
    JEL: J24 N95 R11 R50
    Date: 2022–12
  35. By: Anastasia, Giacomo (Fondazione Rodolfo DeBenedetti); Boeri, Tito (Bocconi University); Kudlyak, Marianna (Federal Reserve Bank of San Francisco); Zholud, Oleksandr (National Bank of Ukraine)
    Abstract: The full-scale invasion of Ukraine and the ongoing war have caused and continue causing damages of devastating proportions. We analyse the impact on the Ukrainian labor market and propose a framework for its rebuilding. The Ukrainian labour market needs not only to be rebuilt – it needs to be rebuilt better. The unprecedented challenges imposed by the reconstruction can be met by a labour market promoting labor market participation and easing the reallocation of workers across jobs. Reconstruction will require a mix of emergency measures dealing with the legacies of the war and structural reforms addressing pre-existing inefficiencies of the Ukrainian labour market. We illustrate the challenges in light of the experience of other European countries having gone through military conflicts in a recent past and propose strategies for action. The detailed proposals are consistent with a four-pronged strategy for reconstruction aimed at: investing in human capital for the future by offering remedial education to the pupils having lost years of education, and offering retraining to job losers still far from retirement; making a better use of existing human capital, increasing labour force participation of women and tackling youth unemployment among internally displaced workers; protecting the most vulnerable groups (job losers, veterans, fragile and older workers) in a sustainable fashion; promoting a return of ideas if not of people, involving in the reconstruction the human capital migrated abroad that will not return back home. These policies should be linked to the EU accession process: they will require technical assistance from European countries having longstanding experience with labour market policies at times of reallocation, and part of them could possibly be financed by instruments connected with EU accession.
    Keywords: Ukraine, labour markets, reconstruction, armed conflict, war
    JEL: E2 J24 N4 H5 L5
    Date: 2022–12
  36. By: Shuichiro Ikeda (Bank of Japan); Haruhiko Inatsugu (Bank of Japan); Yui Kishaba (Bank of Japan); Takuji Kondo (Bank of Japan); Kenichi Sakura (Bank of Japan); Kosuke Takatomi (Bank of Japan); Takashi Nakazawa (Bank of Japan); Kotone Yamada (Bank of Japan)
    Abstract: As the impact of COVID-19 pandemic eased and economic activity resumed, prices have risen sharply in the U.S. and Europe, partly due to the impact of rising commodity prices. Although not to the same extent as the U.S. and Europe, in Japan inflation rates have also been rising, especially for goods prices. In order to further develop the discussion on the nature of these recent price developments in Japan and their outlook, this paper (1) summarizes the characteristics of inflation dynamics in Japan before the spread of COVID-19, mainly using the framework of the Phillips curve, (2) confirms the recent changes and characteristics of price developments, and (3) summarizes the issues for the future. Based on the fact-finding of this paper, we conclude it is important to accumulate analyses on the stickiness of service prices, nominal wage rigidity, and uncertainty in inflation expectations, which are characteristic of Japan, in order to further deepen the discussion on these recent price developments.
    Keywords: Phillips curve; Cost push; Price rigidity; Inflation expectations; Wages
    JEL: E30 E31 J30

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