nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2023‒04‒17
fourteen papers chosen by
Joseph Marchand
University of Alberta

  1. The impact of Robots in Latin America: Evidence from Local Labor Markets By Irene Brambilla; Andrés César; Guillermo Falcone; Leonardo Gasparini
  2. Accumulating valuable work experience: the importance of large firms and big cities By Peters, Jan Cornelius; Niebuhr, Annekatrin
  3. Working Longer, Working Stronger? The Forward-Looking Effects of Increasing the Retirement Age on (Un)employment Behaviour By Niklas Gohl
  4. The Effect of Centrally Bargained Wages on Firm Growth By Bustos, Emil
  5. Racial Diversity and Team Performance: Evidence from the American Offshore Whaling Industry By Michele Baggio; Metin M. Cosgel
  6. Teacher Performance Pay, Coaching, and Long-Run Student Outcomes By Sarah Cohodes; Ozkan Eren; Orgul Ozturk
  7. A Search Model with Self-Employment and Heterogeneity in Managerial Ability By Eliane Badaoui; Olivier Bargain; Prudence Magejo; Eric Strobl; Frank Walsh
  8. The impact of AI on the workplace: Main findings from the OECD AI surveys of employers and workers By Stijn Broecke; Marguerita Lane; Morgan Williams
  9. Job Competition in Civil Servant Public Examinations and Sick Leave Behavior By Grace Armijos Bravo; Judit Vall Castelló
  10. Information Technology, Firm Size, and Industrial Concentration By Erik Brynjolfsson; Wang Jin; Xiupeng Wang
  11. Tournament Incentives Affect Perceived Stress and Hormonal Stress Responses By Thomas Dohmen; Ingrid Rohde; Tom Stolp
  12. Large-Scale Education Reform in General Equilibrium: Regression Discontinuity Evidence from India: Comment By David Roodman
  13. Production Technology, Market Power, and the Decline of the Labor Share By Agustin Velasquez
  14. Labor Market Institutions, Productivity, and the Business Cycle: An Application to Italy By Josué Diwambuena; Raquel Fonseca; Stefan Schubert

  1. By: Irene Brambilla (CEDLAS-IIE-FCE-UNLP); Andrés César (CEDLAS-IIE-FCE-UNLP); Guillermo Falcone (CEDLAS-IIE-FCE-UNLP & CONICET); Leonardo Gasparini (CEDLAS-IIE-FCE-UNLP & CONICET)
    Abstract: We study the effect of robots on labor markets in Argentina, Brazil, and Mexico, the major robot users in Latin America, during the period 2004{2016. We exploit spatial and time variations in exposure to robots arising from initial differences in industry specialization across geographic locations and the evolution of robot adoption across industries, to estimate a causal effect of robots on local labor market outcomes. We find that district's exposure to robots causes a relative deterioration in labor market indicators such us unemployment and labor informality. We document that robots mainly replace formal salaried jobs, affecting young and semi-skilled workers to a greater extent, and that informal employment acts as a buffer that prevents a larger increase in unemployment.
    JEL: J23 J24 J31 J46 O14 O17 R10
    Date: 2023–04
  2. By: Peters, Jan Cornelius (Thünen Institute); Niebuhr, Annekatrin (Institute for Employment Research (IAB), Nuremberg, Germany ; Univ, Kiel)
    Abstract: "Using linked employer-employee data on labor market biographies of workers in Germany, this paper analyzes where valuable work experience is primarily acquired. It distinguishes between learning effects related to firm size and labor market size. We show that wages increase with the size of the cities and establishments in which experience was accumulated. Almost 40 percent of the dynamic benefits of working in large cities are in fact due to working in large firms. We provide evidence on two potential explanations for the role of size: formal training increases with firm size and the frequency of job changes with city size." (Author's abstract, IAB-Doku) ((en))
    Keywords: IAB-Open-Access-Publikation
    JEL: J31 R12 R23
    Date: 2023–03–30
  3. By: Niklas Gohl (University of Potsdam, Berlin School of Economics, DIW)
    Abstract: Leveraging two cohort-specific pension reforms, this paper estimates the forward-looking effects of an exogenous increase in the working horizon on (un)employment behaviour for individuals with a long remaining statutory working life. Using difference-in-differences and regression discontinuity approaches based on administrative and survey data, I show that a longer legal working horizon increases individuals’ subjective expectations about the length of their work life, raises the probability of employment, decreases the probability of unemployment, and increases the intensity of job search among the unemployed. Heterogeneity analyses show that the demonstrated employment effects are strongest for women and in occupations with comparatively low physical intensity, i.e., occupations that can be performed at older ages.
    Keywords: retirement policies, employment, DiD
    JEL: J24 J26 H21
    Date: 2023–03
  4. By: Bustos, Emil (Research Institute of Industrial Economics (IFN))
    Abstract: I study how firms adapt to exogenous changes in labor costs induced by collective bargaining agreements. I use data on collective bargaining agreements in Sweden and study the impact of the nationwide bargaining that took place in 2004. I make a difference-in-differences analysis and compare firms in the same industry that have a different initial skill composition of their workers and thus face different bargained wage increases. Higher centralized wage increases cause the average firm to increase average wages (1.3%) and to grow faster (2.7%) both in terms of employment and sales, while profitability decreases. Firms increase both investments and substitute low-skilled for high-skilled labor. Moreover, the effects are more pronounced for firms with more labor market power and easier access to external finance. This suggests that the results are affected by labor market power, and the ease of input factor substitution.
    Keywords: Collective Wage Bargaining; Firm Growth; Labor Market Power; Job Polarization
    JEL: D22 J23 J31 J42 J51
    Date: 2023–03–31
  5. By: Michele Baggio (University of Connecticut); Metin M. Cosgel (University of Connecticut)
    Abstract: In this paper we contribute to the literature on diversity and team performance by exploiting unique data from the natural experiment of American offshore whaling industry during the period between 1807 and 1912. Teams are represented by the crew operating onboard of whaling vessels and performance is measured by the value of the output captured during voyage. Combining information from multiple data sources, we document the existence of a U-shaped relationship between racial diversity and team performance. The nonlinear effect was transmitted by conflicts and skill complementarity among the whalemen. Crews adapted to diversity over time, as the effect shifted from being negative to negligible and then positive between short, medium, and long term voyages.
    JEL: D24 J15 J24 L25 M14 N11 O47
    Date: 2023–03
  6. By: Sarah Cohodes; Ozkan Eren; Orgul Ozturk
    Abstract: This paper examines the effects of a comprehensive performance pay program for teachers implemented in high-need schools on students’ longer-run educational, criminal justice, and economic self-sufficiency outcomes. Using linked administrative data from a Southern state, we leverage the quasi-randomness of the timing of program adoption across schools to identify causal effects of the school reform. The program improved educational attainment and reduced both criminal activity and dependence on government assistance in early adulthood. We find little scope for student sorting or changes in the composition of teacher workforce, and that program benefits far exceeded its costs. We propose mechanisms for observed long-run effects and provide evidence consistent with these explanations. Several robustness checks and placebo tests support our findings.
    JEL: H75 I21 J32 J45
    Date: 2023–03
  7. By: Eliane Badaoui; Olivier Bargain; Prudence Magejo; Eric Strobl; Frank Walsh
    Abstract: The view of informal employment as a last resort in the labour market has recently been challenged by numerous studies documenting the existence of a high degree of heterogeneity within the formal and informal sectors - in particular the presence of high-tier informal work corresponding to voluntary self-employment. There is currently not much theoretical support for these observations. We develop a formal model to explain this growing empirical evidence about substantial heterogeneity within formal/informal labour markets. In our model, workers may enter self-employment or search for jobs as employees, while allowing for heterogeneity across workers’ managerial ability. While workers with higher managerial ability will manage larger firms, workers with lower managerial ability will manage smaller firms and be in self-employment only when they cannot find a salaried formal/informal job. For the latter, self-employment in the informal sector is the outside employment option.
    Keywords: Self-employment; Managerial ability; Informal sector.
    JEL: J31 O17
    Date: 2023
  8. By: Stijn Broecke; Marguerita Lane; Morgan Williams
    Abstract: New OECD surveys of employers and workers in the manufacturing and finance sectors of seven countries shed new light on the impact that Artificial Intelligence has on the workplace —an under-researched area to date due to lack of data. The findings suggest that both workers and their employers are generally very positive about the impact of AI on performance and working conditions. However, there are also concerns, including about job loss—an issue that should be closely monitored. The surveys also indicate that, while many workers trust their employers when it comes to the implementation of AI in the workplace, more can be done to improve trust. In particular, the surveys show that both training and worker consultation are associated with better outcomes for workers.
    JEL: J2 J3 J5 J6
    Date: 2023–03–27
  9. By: Grace Armijos Bravo (Universitat de Barcelona & IEB & ESAI Business School - Universidad Espíritu Santo); Judit Vall Castelló (University of Barcelona, IEB &CRES-UPF)
    Abstract: In several countries the entry system to access public service positions is the traditional public examination procedure. In this setting, candidates have to take passing exams that require a huge load of material to study, and therefore time. Candidates who are working while preparing the public exam may find it difficult to devote enough time to both tasks. Thus, they might experience increased stress/anxiety related to high stakes civil service recruitment testing. In this paper, we investigate the impact of new openings of civil servant positions on sickness absences. Using a unique administrative dataset on the universe of sickness absences and civil servant positions offered in Spain from 2009 to 2015, we find a significant increase in health-related absences several months before the examination date. In particular, this effect is stronger for individuals working in the educational sector as well as for calls offering a large number of positions. This effect is mostly driven by stress related absences. Finally, using data on medical visits (GP and specialist) we find evidence consistent with a deterioration in públic sector workers’ health. Our results are important from a policy perspective as they highlight the existence of important negative consequences of the civil service recruitment process that have been previously overlooked.
    Keywords: Public Examinations, Sick Leave; Negative Externalities, Absenteeism
    JEL: I13 J22 J45
    Date: 2023
  10. By: Erik Brynjolfsson; Wang Jin; Xiupeng Wang
    Abstract: Information flows, and thus information technology (IT) are central to the structure of firms and markets. Using data from the U.S. Census Bureau, we provide firm-level evidence that increases in IT intensity are associated with increases in firm size and concentration in both employment and sales. Results from instrumental variables and long-difference models suggest that the effect is likely causal. The effect of IT on size is more pronounced for sales than employment, which leads to a decline in the labor share, consistent with the “scale without mass” theory of digitization. Furthermore, we find that IT provides greater benefits to larger firms by increasing their capability to replicate their operations across establishments, markets, and industries. Our findings provide empirical evidence suggesting that the substantial rise in IT investment is one of the main driving forces for the increase in firm size, decline of labor share, the growth of superstar firms, and increased market concentration in recent years.
    JEL: L10 O3 O30
    Date: 2023–03
  11. By: Thomas Dohmen (IZA (Schaumburg-Lippe-Strasse 5-9, 53113 Bonn, Germany), University of Bonn (Institute for Applied Microeconomics, Adenauerallee 24-42, 53113 Bonn, Germany), Maastricht University (Tongersestraat 53, 6211 LM Maastricht, The Netherlands).); Ingrid Rohde (Open Universiteit (Valkenburgerweg 177, 6419 AT Heerlen, The Netherlands).); Tom Stolp (Maastricht University (Tongersestraat 53, 6211 LM Maastricht, The Netherlands) and Vrije Universiteit Amsterdam (Boelelaan 1105, 1081 HV Amsterdam, The Netherlands).)
    Abstract: We conduct a laboratory experiment among male participants to investigate whether rewarding schemes that depend on work performance – in particular, tournament incentives – induce more stress than schemes that are independent of performance - fixed payment scheme. Stress is measured over the entire course of the experiment at both the hormonal and psychological level. Hormonal stress responses are captured by measuring salivary cortisol levels. Psychological stress responses are measured by self-reported feelings of stress and primary appraisals. We find that tournament incentives induce a stress response whereas a fixed payment does not induce stress. This stress response does not differ significantly across situations in which winners and losers of the tournament are publically announced and situations in which this information remains private. Biological and psychological stress measures are positively correlated, i.e. increased levels of cortisol are associated with stronger feelings of stress. Nevertheless, neither perceived psychological stress nor elevated cortisol levels in a previous tournament predict a subsequent choice between tournaments and fixed payment schemes, indicating that stress induced by incentives schemes is not a relevant criterion for sorting decisions in our experiment. Finally, we find that cortisol levels are severely elevated at the beginning of the experiment, suggesting that participants experience stress in anticipation of the experiment per se, potentially due to uncertainties associated with the unknown lab situation. We call this the novelty effect.
    Keywords: Incentives, stress, cortisol, sorting, laboratory experiment
    JEL: D23 D87 D91 M52
    Date: 2023–03
  12. By: David Roodman
    Abstract: This paper reanalyzes Khanna (2023), which studies labor market effects of schooling in India through a regression discontinuity design. In graphical preliminaries, reversing overrides of the plotting software's defaults greatly reduces the appearance of discontinuities. Absent from the data are four districts close to the discontinuity; restoring them cuts the reduced-form impacts on schooling and log wages by 62% and 75%. Using a consistent variance estimator, and clustering it at the geographic unit of treatment, further weakens the inference of positive impact. The estimates of general equilibrium effects and elasticities of substitution are not unbiased and have effectively infinite variance.
    Date: 2023–03
  13. By: Agustin Velasquez
    Abstract: The labor share has been declining in the United States, and especially so in manufacturing. This paper investigates the role of capital accumulation and market power in explaining this decline. I first estimate the production function of 21 manufacturing sectors along time series and including time-varying markups. The elasticities of substitution for most sectors are estimated below one, implying that capital deepening cannot explain the labor share decline. I then track the long-run evolution of the labor share using the estimated production technology parameters. I decompose aggregate labor share changes into sector re-weights, capital-labor substitution, and market power effects. I find that the increase in market power, as reported in recent studies, can account for, at least, 76 percent of the labor share decline in manufacturing. Absent the rise in market power, the labor share would have remained constant in the second half of the 20th century.
    Keywords: Labor share; elasticity of substitution; capital accumulation; market power; labor share decline; market power effects; capital-labor substitution; market power narrative; markup series; capital share; Manufacturing; Income
    Date: 2023–02–10
  14. By: Josué Diwambuena; Raquel Fonseca; Stefan Schubert
    Abstract: This paper studies the effect of labor market institutions on the cyclicality of labor productivity and aggregate fluctuations in Italy. It uses a New Keynesian model with labor market frictions and labor effort when two wage bargaining settings (efficient Nash and right-to-manage) interact with three types of hiring costs. We focus on three sets of labor market deregulation modeled as a fall in wage rigidity, hiring costs, and the bargaining power of workers. We show that, when labor effort varies, reforms trigger procyclical productivity under efficient bargaining, and countercyclical productivity under right-to-manage bargaining. Reforms also have different effects on cyclical moments. Second, we estimate the model with Bayesian techniques and find that productivity is mainly driven by technology shocks.
    Keywords: Labor market institutions, labor productivity, business cycles, hiring costs, effort.
    JEL: E24 E32 C51 C52
    Date: 2023

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