nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2023‒02‒06
twenty papers chosen by
Joseph Marchand
University of Alberta

  1. Monopsony, Job Tasks, and Labor Market Concentration By Samuel Dodini; Michael F. Lovenheim; Kjell G. Salvanes; Alexander Willén
  2. Educational Job Mismatch, Job Satisfaction, On-the-Job Training, and Employee Quit Behavior: A Dynamic Analytical Approach By Wen, Le; Maani, Sholeh A.; Dong, Zhi
  3. Approaches to learn about employer learning By Ablay, Mahmut; Lange, Fabian
  4. The Australian labour market and IT-enabled technological change By Jeff Borland; Michael Coelli
  5. Does offshoring shape labor market imperfections? A comparative analysis of Belgian and Dutch firms By Sabien Dobbelaere; Catherine Fuss; Mark Vancauteren
  6. Pension Reforms, Longer Working Horizons and Absence from Work By Brunello, Giorgio; De Paola, Maria; Rocco, Lorenzo
  7. Where Are the Workers? From Great Resignation to Quiet Quitting By Dain Lee; Jinhyeok Park; Yongseok Shin
  8. Labour and skills shortages in the agro-food sector By Michael Ryan
  9. Too Many Managers: The Strategic Use of Titles to Avoid Overtime Payments By Lauren Cohen; Umit Gurun; N. Bugra Ozel
  10. The labor market returns to unobserved skills: Evidence from a gender quota By Moeeni, Safoura; Wei, Feng
  11. The Evolution of Labor Market Disparities between Hispanic and non-Hispanic Men: 1970-2019 By Ioannis Kospentaris; Leslie S. Stratton
  12. Schooling and Labor Market Consequences of School Construction in Indonesia: Comment By Roodman, David
  13. The Long-Run Earnings Effects of Winning a Mayoral Election By Bertoni, Marco; Brunello, Giorgio; Cappellari, Lorenzo; De Paola, Maria
  14. Losing height: measuring the regional loss of human capital from the Republican exile to Mexico By Sanchez Alonso, Blanca; Santiago Caballero, Carlos
  15. Political Economy of Industrialization and Industrial Parks in Ethiopia By Kebede, Selamawit G.; Heshmati, Almas
  16. How do mass lay-offs affect regional economies? By Wessel Vermeulen; Nils Braakmann
  17. On decomposing the changes in wage inequality in palestine over time By Hatem Jemmali; Rabeh Morrar; Fernando Rios-Avila
  18. Structural Reforms and Income Distribution: New Evidence for OECD countries By Rasmus Wiese; João Jalles; Jakob de Haan
  19. Keeping the best of two worlds: Linking CGE and microsimulation models for policy analysis By Konstantīns Beņkovskis; Ludmila Fadejeva; Anna Pluta; Anna Zasova
  20. Gender quotas, board diversity and spillover effects. Evidence from Italian banks By Silvia Del Prete; Giulio Papini; Marco Tonello

  1. By: Samuel Dodini; Michael F. Lovenheim; Kjell G. Salvanes; Alexander Willén
    Abstract: This paper extends the literature on monopsony and labor market concentration by taking a task-based approach and estimating the causal effect of concentration in the demand for skills on labor market outcomes. The prior literature has focused on industry and occupation concentration and likely overstates the degree of monopsony power, since worker skills are substitutable across different firms, occupations, and industries. Exploiting linked employer-employee data that cover the universe of Norwegian workers over time, we find that our job task-based measure shows lower degrees of concentration than the conventional industry-and occupation-based measures. We also find that the gender gap in concentration is substantially larger using this measure. Exploiting mass layoffs and establishment closures as exogenous shocks to local labor demand, we show that workers who experience a mass separation have substantially worse subsequent labor market outcomes when they are in more concentrated labor markets defined by skill clusters. Our results point to the existence of employer market power in the economy that is driven by the concentration of skill demand across firms.
    JEL: J23 J24 J42 J63
    Date: 2023–01
  2. By: Wen, Le (University of Auckland); Maani, Sholeh A. (University of Auckland); Dong, Zhi (University of Auckland)
    Abstract: This paper extends the literature on the consequences of over-education, in particular quit outcomes. It is the first study that explicitly tests the impact of job satisfaction and on-the-job training for workers in educational mismatched jobs and on quit behavior using a longitudinal data set. Accounting for unobserved heterogeneity and endogeneity, the dynamic analytical framework examines labor market outcomes for job-mismatched workers. We find that over-education alone, or accompanied by skill under-utilization in combination with lower job satisfaction, increases the incidences of job quitting. Opportunities for training facilitate the retention of initially job-mismatched workers. These results have implications for interpreting mismatch data, retention, and resource allocation.
    Keywords: on-the-job training, job satisfaction, over-skilling, over-education, turnover
    JEL: J24 J28 J31 J63
    Date: 2023–01
  3. By: Ablay, Mahmut; Lange, Fabian
    Abstract: The empirical literature on employer learning assumes that employers learn about unobserved ability differences across workers as they spend time in the labor market. This article describes testable implications that arise from this basic hypothesis and how they have been used to quantify the contribution of Job Market Signaling and human capital in measured returns to education. While the empirical basis is still thin, the results suggest that Signaling contributes at most about 25% to the observed returns to education.
    Keywords: Job Market Signaling, Human Capital, Returns to Education, Employer Learning
    JEL: E24 J31
    Date: 2022
  4. By: Jeff Borland (Department of Economics, The University of Melbourne); Michael Coelli (Department of Economics, The University of Melbourne)
    Abstract: We review the impact of IT-enabled technological change on the Australian labour market. The main ways in which these new technologies can affect labour market outcomes are catalogued; and evidence on their impacts in Australia is assessed, with reference to four main labour market outcomes: (i) the total amount of work; (ii) the type of work and skills demanded; (iii) inequality; and (iv) the gig economy. We conclude with discussions of policy implications and lessons.
    Keywords: technology, IT, employment, skills, inequality, gig economy
    JEL: J21 J23 J24 O33
    Date: 2023–01
  5. By: Sabien Dobbelaere (: Vrije Universiteit Amsterdam, Tinbergen Institute and IZA Institute of Labor Economics); Catherine Fuss (Economics and Research Department, NBB); Mark Vancauteren (Universiteit Hasselt and Statistics Netherlands (CBS))
    Abstract: This paper examines the relationship between offshoring and the prevalence and intensity of labor market imperfections at the firm level. For this purpose, we use Belgian and Dutch manufacturing firm-level data over the period 2009-2017 from Business registers and VAT declarations combined with information in the Transaction Trade database that reports values and volumes of international transactions at the country, firm and product level. In both countries, we find that wage markup-pricing stemming from workers’ monopoly power is more prevalent than wage markdown-pricing originating from employers’ monopsony power. Offshoring benefits Belgian and Dutch employers in that imports of final as well as intermediate goods are associated with a larger prevalence and intensity of wage markdowns. The opposite holds for the prevalence of wage markups. In Belgium, we also find that offshoring is negatively related to the intensity of wage markups measured by workers’ bargaining power. The origin of imports matters for the prevalence of labor market imperfections in Belgian firms. This is far less so in Dutch firms, which could be explained by their more global focus and the more global scale of the vertical chain in which they operate.
    Keywords: Wage markdowns, wage markups, firm-level offshoring
    JEL: F14 F16 J42 J50
    Date: 2022–11
  6. By: Brunello, Giorgio (University of Padova); De Paola, Maria; Rocco, Lorenzo (University of Padova)
    Abstract: Using matched employer-employee data for Italy and newly available information on sick leaves certificates, we study the effect of an exogenous increase in the length of the residual work horizon – triggered by a pension reform that increased minimum retirement age - on middle-aged employees' absence from work due to sick leaves. We find that this effect is positive for females and negative for males. After excluding health as a plausible mechanism, we argue that the intertemporal substitution of leisure prevailed on the fear of job loss for females, while the opposite happened to males. Sick leaves increased only for females working in firms paying smaller wage premia to female than to male workers, suggesting that, in these firms, females exchange lower pay with higher flexibility in their work schedule.
    Keywords: absences from work, retirement, Italy
    JEL: J22 J26
    Date: 2023–01
  7. By: Dain Lee; Jinhyeok Park; Yongseok Shin
    Abstract: To better understand the tight post-pandemic labor market in the US, we decompose the decline in aggregate hours worked into the extensive (fewer people working) and the intensive margin changes (workers working fewer hours). Although the pre-existing trend of lower labor force participation especially by young men without a bachelor's degree accounts for some of the decline in aggregate hours, the intensive margin accounts for more than half of the decline between 2019 and 2022. The decline in hours among workers was larger for men than women. Among men, the decline was larger for those with a bachelor's degree than those with less education, for prime-age workers than older workers, and also for those who already worked long hours and had high earnings. Workers' hours reduction can explain why the labor market is even tighter than what is expected at the current levels of unemployment and labor force participation.
    JEL: J21 J22
    Date: 2023–01
  8. By: Michael Ryan
    Abstract: Labour and skills shortages are a major concern in the agro-food sector across OECD countries. This challenge is compounded by the relatively small, and declining, contribution of agriculture to GDP, and the negative public perception of the sector with relatively low wages and limited career prospects. This paper reviews policies that have the potential to address labour and skills shortages in the agro-food sector including labour market, education and training, social protection policies, immigration, as well as agricultural specific policies. Many of the policy levers used to address the agro-food labour challenge lie outside the sector and involve finding the right policy mix that tends to be country specific. Furthermore, some issues can be addressed by closer public and private collaboration such as improving working conditions, increasing investment in agricultural education and training of young entrants to the sector. Greater attention also needs to be given to improving the image of agriculture as a career choice, promoting a more diverse workforce, improving the alignment of skills to the needs of the sector, promoting continuous learning, and strengthening national advisory services.
    Keywords: Agricultural policy, Agriculture
    JEL: J21 J24 Q10 Q18
    Date: 2023–01–17
  9. By: Lauren Cohen; Umit Gurun; N. Bugra Ozel
    Abstract: We find widespread evidence of firms appearing to avoid paying overtime wages by exploiting a federal law that allows them to do so for employees termed as “managers” and paid a salary above a pre-defined dollar threshold. We show that listings for salaried positions with managerial titles exhibit an almost five-fold increase around the federal regulatory threshold, including the listing of managerial positions such as “Directors of First Impression, ” whose jobs are otherwise equivalent to non-managerial employees (in this case, a front desk assistant). Overtime avoidance is more pronounced when firms have stronger bargaining power and employees have weaker rights. Moreover, it is more pronounced for firms with financial constraints and when there are weaker labor outside options in the region. We find stronger results for occupations in low-wage industries that are penalized more often for overtime violations. Our results suggest broad usage of overtime avoidance using job titles across locations and over time, persisting through the present day. Moreover, the wages avoided are substantial - we estimate that firms avoid roughly 13.5% in overtime expenses for each strategic “manager” hired during our sample period.
    JEL: G30 G38 M51 M54
    Date: 2023–01
  10. By: Moeeni, Safoura; Wei, Feng
    Abstract: We estimate the effects of unobserved skills on labor market outcomes by investigating a change in the distribution of unobserved skills. Among people with the same levels of observed skills such as education and work experience, there are still disparities in labor market outcomes. since employers cannot observe all applicantsâ skills and productivity, they rely on the average skills of different groups. We exploit a discontinuity generated by the 2012 education policy in Iran. This policy restricting female students in specific college majors changes the size and skill distribution of high school graduates. We find three main findings. First, the education quota lowers women's college attendance. Second, young high-school graduate women are more likely to participate in the labor market and have a job. Third, the gender wage gap decreases among high-school workers due to both within and between occupation changes: treated women are paid more and they take up higher-paying middle-skilled positions that used to be non-traditional occupations for them.
    Keywords: Unobserved Skills, Occupational Choice, Education Quota, Gender Discrimination, Wage differentials
    Date: 2022
  11. By: Ioannis Kospentaris (Department of Economics, VCU School of Business); Leslie S. Stratton (Department of Economics, VCU School of Business)
    Abstract: We describe how ethnic disparities in the labor market between prime aged Hispanic and non-Hispanic white men have evolved over the last 50 years. Using data from the March CPS, the Census, and the ACS, we examine several employment and earning outcomes. Hispanics have experienced sizable gains to employment: from a negative 2% prior to 1990 to a positive 4% after 2010 compared to non-Hispanics. In terms of earnings, Hispanics face a substantial negative disparity between 20% and 30% with some improvement after 2000. Most of the employment gain is driven by those with less than a high school degree, while the earnings disparity increases with education. Comparing Hispanic immigrants with natives reveals much of the employment and earnings gains are attributable to Hispanic immigrants, particularly immigrants not fluent in English.
    Keywords: Hispanics; ethnicity; disparities; earnings; employment; education; immigration
    JEL: J15 J21 J31 J71
    Date: 2022–12
  12. By: Roodman, David
    Abstract: Duflo (2001) exploits a 1970s schooling expansion in Indonesia to estimate the returns to schooling. Under the study's difference-in-differences (DID) design, two patterns in the data-shallower pay scales for younger workers and negative selection in treatment-can violate the parallel trends assumption and upward-bias results. In response, I follow up later, test for trend breaks timed to the intervention, and perform changes-in-changes (CIC). I also correct data errors, cluster variance estimates, incorporate survey weights to correct for en-dogenous sampling, and test for (and detect) instrument weakness. Weak identification-robust inference yields imprecise, positive estimates. CIC estimates tilt slightly negative.
    Keywords: education, wages, reanalysis
    JEL: I2 J31 O15
    Date: 2023
  13. By: Bertoni, Marco (University of Padova); Brunello, Giorgio (University of Padova); Cappellari, Lorenzo (Università Cattolica del Sacro Cuore); De Paola, Maria
    Abstract: We estimate the effect of winning a mayoral election on long-run licit earnings, which plays a key role in the selection of local political leaders. We use Italian administrative social security data from 1995 to 2017 and a sharp regression discontinuity design based on close elections. Over a 15-year horizon, the average present discounted value of winning an election is equal to 35, 000€, or 85 percent of the annual labor and social security earnings for the average candidate in our sample, a modest effect driven by the compensations for political service and concentrated during the first five years after the election. Net of compensations for service, this effect is negative during the first ten years after the election, and almost fades away afterwards. Differences in the political careers of winners and runners-up and a two-term limit rule on mayors' office contribute to explain our results.
    Keywords: returns to office, political selection, revolving door, rent-seeking, close elections
    JEL: D72 J44 J45
    Date: 2023–01
  14. By: Sanchez Alonso, Blanca; Santiago Caballero, Carlos
    Abstract: Recent studies showed that Spanish republican exiles who travelled to Mexico to escape the effects and aftermath of the Spanish civil war were positively selected. However, the potential existence of regional differences in this positive selection needs to be addressed appropriately. Using a new dataset directly extracted from primary sources, we compare the heights of the republican exiles in Mexico with the estimations of those who stayed behind in their provinces of origin. We also study the existence of potential determinants to explain these differences. In addition to estimating how intense the loss of human capital was at the regional level, we also compare the heights of the republican exiles in Mexico with the heights of the Mexican population. Our results show significant regional differences in the positive selection of republican exiles. This was probably the consequence of the opportunities the local populations had to escape after the war started. We also show that Mexico was a place where Spanish migrants were able to obtain better occupations than their counterparts in Spain, meaning that although Mexico benefited from the arrival of a highly skilled labour force, it also provided republican exiles new opportunities.
    Keywords: Heights; Exile; Gender; War
    JEL: D6 J24 N0 N33 O15
    Date: 2023–01–20
  15. By: Kebede, Selamawit G. (University of Addis Ababa, Ethiopia); Heshmati, Almas (Jönköping University, Sogang University)
    Abstract: This study investigates the political economy of industrialization in Ethiopia. It discusses the economic and political institutions during three political regimes and assesses the industrial sector's performance across these different regimes. Further, it evaluates the different industrial strategies and organizational structures for implementing the industrial policies together with the current industrial park strategy and its contemporary impact on employment creation, export promotion, foreign exchange revenues, the value chain, and spillover effects. Both qualitative and quantitative approaches are used for exploring the role of political economy in Ethiopian industrialization. Different political strategies were followed by the political regimes to support the industrial sector. The paper distinguishes between two extreme political strategies of protectionist import substitution industrialization and the outward strategy of export-oriented industrialization. The study confirms that political institutions negatively impacted industry for several decades. The results support focusing on institutions to successfully implement industry policies for inducing the industrialization process in the country. Policies must be implemented considering existing opportunities and resources in the country along with their respective economic outcomes instead of excessive priority being given to the political interests of the regime in power.
    Keywords: industrialization, industrial parks, political economy, industrial strategy, industry growth, Ethiopia
    JEL: J24 O14 O25 O47 P48
    Date: 2023–01
  16. By: Wessel Vermeulen; Nils Braakmann (Newcastle University Business School)
    Abstract: Mass lay-offs from firms and plant restructuring occur regularly and can have potentially large consequences on places and communities. Policy makers may consider supporting firms, in order to prevent mass lay-offs but at the risk of interfering with economic dynamism, or targeting affected workers, to help them transition to new employment. Which strategy (firms versus workers) is the most appropriate and under which circumstances can be informed by better understanding the nature of the economic impact from mass lay-offs. This paper estimates the impact of mass lay-offs between 2008-18 across small regions (TL3) in Europe on regional employment and productivity. It finds there are persistent negative employment effects of mass lay-offs, and rural regions are more negatively affected on average. In part because of differences in the nature of the firm in the region, its relationship with nearby suppliers and clients, and the broader economic context of the region, productivity effects can be both positive and negative over the longer term.
    Keywords: economic shocks, local labour market, mass lay-offs, regional resilience
    JEL: J21 R12 R23
    Date: 2023–01–20
  17. By: Hatem Jemmali (University of Manouba); Rabeh Morrar (An-Najah National University); Fernando Rios-Avila (Levy Economics Institute of Bard College, Annandale-on-Hudson)
    Abstract: This paper examines the changes in wage inequality over the period 2009-16 in Palestine's labor market. The wage inequality, assessed by the Gini coefficient, the bottom and upper quintiles, and the middle inter-quintiles, is found to be in an increasing trend over years. Using an intertemporal decomposition approach, we decompose the changes in wage inequality into a composition effect explained by changes in demographic and labor market characteristics, and a wage structure effect attributable to unequal returns to those characteristics. We find evidence that the composition effect – explained by changes in industry composition, region, and refugee status – dominates the wage structure effect in explaining the rise of wage inequality over the first two years. Instead, the results indicate that the wage structure effect of age and discrimination against female workers has a significant and positive contribution to the increase of the Gini coefficient and the upper quintile over the remaining years of the period.
    Date: 2022–12–20
  18. By: Rasmus Wiese; João Jalles; Jakob de Haan
    Abstract: This paper examines the impact of labour market and product market reforms on income inequality for 25 OECD countries, using the local projections approach and updates of the reform indicators put together by Duval et al. (2018) until 2020. Our results suggest that both types of (endogenized) reforms cause more income inequality. Consistent with this finding is that counter-reforms lead to less income inequality. However, the inequality-raising effects of reforms occur especially in countries that have below median levels of social spending; in countries where social spending is above the sample median, the effect of reform is mostly statistically insignificant.
    Keywords: structural reforms; income distribution; local projections; nonlinearities
    JEL: D31 J21 H30 L43 L51
    Date: 2023–01
  19. By: Konstantīns Beņkovskis (Latvijas Banka); Ludmila Fadejeva (Latvijas Banka); Anna Pluta (The Baltic International Centre for Economic Policy Studies); Anna Zasova (The Baltic International Centre for Economic Policy Studies)
    Abstract: In this paper, we link a CGE model with the tax-benefit microsimulation model EUROMOD for Latvia. The model linkage is done using an iterative top-down bottom-up approach, ensuring the convergence of changes in disposable income, employment and wage in both models. We also incorporate the unreported wage payments in CGE and EUROMOD to account for the substantial labour tax non-compliance in Latvia and improve the modelling of the fiscal sector. Several simulations demonstrate the advantages of the joint CGE-EUROMOD system over the individual macro and microsimulation models. The lack of income distribution aspect and the scarcity of fiscal instruments in CGE can be overcome by the features of EUROMOD. The CGE model, on the other hand, provides macroeconomic spillovers that are missing in the simulations of EUROMOD.
    Keywords: EUROMOD, CGE model, model linkage, informal sector
    JEL: C68 D58 D90 J46
    Date: 2023–01–17
  20. By: Silvia Del Prete (Bank of Italy); Giulio Papini (Bank of Italy); Marco Tonello (Bank of Italy)
    Abstract: We study the impact of a 2011 law on the diversity of bank boards. The law required all listed companies in Italy (including banks) to increase the share of female representatives on their boards up to one third of total seats. We look at listed banks (the ones directly targeted by the law), but also test whether the law led to spillover effects on non-listed banks belonging to listed groups. Using administrative data on board composition between 2007 and 2019, we compare some measures of diversity of boards of listed and unlisted banks belonging to listed groups with those of institutions included in non-listed groups, before and after the introduction of the law. We find that female representation increased only for listed banks, with no spillover effects of the law on those belonging to listed groups, while the economic performance of listed banks remained broadly unchanged.
    Keywords: bank board composition, diversity, gender, corporate governance
    JEL: G21 G38 J48 J78
    Date: 2022–12

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