nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2023‒05‒22
fifteen papers chosen by
Joseph Marchand
University of Alberta

  1. The Increasing Penalty to Occupation-Education Mismatch By Cassidy, Hugh; Gaulke, Amanda
  2. Longer careers: A barrier to hiring and coworker advancement? By Irene Ferrari; Jan Kabátek; Todd Morris
  3. Labor Market of Regular Workers in Japan: A Perspective from Job Advertisement Data By Kakuho Furukawa; Yoshihiko Hogen; Yosuke Kido
  4. Pension Reforms and Couples' Labour Supply Decisions By Moghadam, Hamed Markazi; Puhani, Patrick; Tyrowicz, Joanna
  5. Generative AI at Work By Erik Brynjolfsson; Danielle Li; Lindsey R. Raymond
  6. The Women Empowering Effect of Higher Education By Elsayed, Ahmed; Shirshikova, Alina
  7. Monetary Rewards, Hierarchy Level and Working Hours as Drivers of Employees' Self-Evaluations By Grund, Christian; Soboll, Alexandra
  8. The Different Returns to Cognitive Ability in the Labor and Capital Markets By Bastani, Spencer; Karlsson, Kristina; Waldenström, Daniel
  9. The Role of Education in The Disability Employment Gap By Mark Bryan; Andrew Bryce; Jennifer Roberts; Cristina Sechel
  10. LEVEL UP! Support and develop collective bargaining coverage By Daniela Ceccon; Marta Kahancová; Monika Martišková; Gabriele Medas; Adam Šumichrast
  11. Beauty and Productivity in Academic Publishing By Kseniya Bortnikova
  12. Self-Employment Income Reporting on Surveys By Christian Imboden; John Voorheis; Caroline Weber
  13. Health Risks and Labour Supply By Joseph Richardson
  14. Richer earnings dynamics, consumption and portfolio choice over the life cycle By Gálvez, Julio; Paz-Pardo, Gonzalo
  15. Price Markups and Wage Setting Behavior of Japanese Firms By Kosuke Aoki; Yoshihiko Hogen; Kosuke Takatomi

  1. By: Cassidy, Hugh (Kansas State University); Gaulke, Amanda (Kansas State University)
    Abstract: College-educated workers in jobs unrelated to their degree generally receive lower wages compared to well-matched workers. Our analysis of data from the National Survey of College Graduates shows that although the rate of this mismatch declined only slightly (19% to 17%), the wage penalty increased by 51% between 1993 and 2019. Changes in the composition of field of study over time, as well as declining returns to "excess" education above what is required for the occupation both help to explain the increasing penalty, especially for women. Mismatch has become more closely associated with lowerreturn occupations for men but not women.
    Keywords: education mismatch, field of study, wage penalty
    JEL: J24 I26 I23 J31
    Date: 2023–04
  2. By: Irene Ferrari; Jan Kabátek; Todd Morris
    Abstract: Government policies are encouraging older workers to delay retirement, which may curb younger workers’ career advancement. We study a Dutch reform that raised the retirement age by 13 months and nearly tripled employment at age 66. Using monthly linked employer-employee data, we show that affected firms delay and decrease replacement hiring, and coworkers’ earnings fall via reductions in hours worked, wages, and promotions. Combined, the hiring and coworker spillovers offset most of the additional hours worked by older workers, disproportionately affect career advancement for younger workers and women, and considerably increase the policy’s ratio of welfare costs to fiscal savings.
    Keywords: retirement reform; labor demand; internal labor markets; firms; coworker spillovers
    JEL: H55 J23 J26 J63
    Date: 2023
  3. By: Kakuho Furukawa (Bank of Japan); Yoshihiko Hogen (Bank of Japan); Yosuke Kido (Bank of Japan)
    Abstract: We analyze labor market tightness and wages for regular workers in Japan, using online job advertisement big data from 2015 to 2022 (approximately 5.8 million samples). The analysis reveals several aspects of the labor market which cannot be captured by official statistics. First, the ratio of job postings matched to job applicants (job-filling rate) has been declining, which suggests that firms may be facing greater difficulties in hiring workers than indicated by macro indicators such as jobs-to-applicants ratio. Second, the decline in the job-filling rate is in part driven by an increase in skill requirements of firms. This is related to the observed acceleration in the accumulation of intangible assets, which has a complementary effect in raising demand for high skilled workers. Third, posted wages are clearly rising under tightening labor market conditions, driven by an increase in demand for high skilled workers. Fourth, an increase in posted wages spills over to average wages of regular workers with some time lag. As for this spillover mechanisms, our empirical results support the existence of (1) a channel in which firms raise wages in order to retain workers as it becomes easier for them to move to higher paying jobs, and (2) a channel in which firms raise wages for fairness consideration as newly hired workers are paid high wages within a firm.
    Keywords: Job advertisement; Alternative data; Posted wages; Labor demand; Skill requirement
    JEL: J23 J24 J30
  4. By: Moghadam, Hamed Markazi; Puhani, Patrick; Tyrowicz, Joanna
    Abstract: To determine how wives' and husbands' retirement options affect their spouses' (and their own) labour supply decisions, we exploit (early) retirement cutoffs by way of a regression discontinuity design. Several German pension reforms since the early 1990s have gradually raised women's retirement age from 60 to 65, but also increased ages for several early retirement pathways affecting both sexes. We use German Socio-Economic Panel data for a sample of couples aged 50 to 69 whose retirement eligibility occurred (i) prior to the reforms, (ii) during the transition years, and (iii) after the major set of reforms. We find that, prior to the reforms, when several retirement options were available to both husbands and wives, both react almost symmetrically to their spouse reaching an early retirement age, that is both husband and wife decrease their labour supply by about 5 percentage points when the spouse reaches age 60. This speaks in favour of leisure complementarities. However, after the set of reforms, when retiring early was much more difficult, we find no more significant labour supply reaction to the spouse reaching a retirement age, whereas reaching one's own retirement age still triggers a significant reaction in labour supply. Our results may explain some of the diverse findings in the literature on asymmetric reactions between husbands and wives to their spouse reaching a retirement age: such reactions may in large parts depend on how flexibly workers are able to retire.
    Keywords: Retirement Coordination, Labour Market Participation, Household Decisions, Regression Discontinuity Design
    JEL: J22 J26
    Date: 2023–04
  5. By: Erik Brynjolfsson; Danielle Li; Lindsey R. Raymond
    Abstract: We study the staggered introduction of a generative AI-based conversational assistant using data from 5, 179 customer support agents. Access to the tool increases productivity, as measured by issues resolved per hour, by 14 percent on average, with the greatest impact on novice and low-skilled workers, and minimal impact on experienced and highly skilled workers. We provide suggestive evidence that the AI model disseminates the potentially tacit knowledge of more able workers and helps newer workers move down the experience curve. In addition, we show that AI assistance improves customer sentiment, reduces requests for managerial intervention, and improves employee retention.
    JEL: D8 J24 M15 M51 O33
    Date: 2023–04
  6. By: Elsayed, Ahmed (American University in Cairo); Shirshikova, Alina (Maastricht University)
    Abstract: We examine the effects of the large-scale construction of public universities in Egypt during the 1960s and 1970s. We found that opening a local university increased the likelihood of obtaining higher education degrees and had long-lasting positive effects on labor market and marriage outcomes, particularly for women. We give insights on internal migration as a channel and show that migration prior to university enrollment age decreased while migration after that age increased as an outcome of university construction. Local universities reduced men's migration for study and women's migration for early marriage. The paper highlights the importance of increasing access to higher education for positive social and labor outcomes, particularly for women.
    Keywords: umpowerment of women, universities, higher education, Egypt
    JEL: I21 I23 J22 J24 O15 O55
    Date: 2023–04
  7. By: Grund, Christian (RWTH Aachen University); Soboll, Alexandra (RWTH Aachen University)
    Abstract: In this study, we explore the relation between job characteristics and employees' self-evaluations of performance in comparison to their colleagues' performance. Making use of unique individual panel data of ten large firms in Germany's chemical industry, we focus on monetary rewards (bonus payments and wage increases), level of hierarchy and weekly working hours as well as interactions with gender and tenure as possible drivers of self-evaluations. Our results hint for particular relevance of working hours, and some extent of hierarchy levels and monetary rewards. We find less evidence for our hypotheses regarding interaction effects of gender and tenure.
    Keywords: self-evaluations, bonus payments, wage increases, level of hierarchy, working hours
    JEL: J3 M5
    Date: 2023–03
  8. By: Bastani, Spencer (Institute for Evaluation of Labour Market and Education Policy (IFAU)); Karlsson, Kristina (Department of Economics, Uppsala University); Waldenström, Daniel (Research Institute of Industrial Economics (IFN))
    Abstract: We investigate the returns to cognitive ability in the labor and capital markets. Using population-wide Swedish military enlistment data and administrative tax records, we find that cognitive ability is much better at predicting capital income than labor earnings. The difference is almost a factor of three and remains substantial even after controlling for education, occupation, savings, inheritance, and parental background. Moreover, ability is significantly positively correlated with wealth returns. Our results provide new insights into why inequality in capital income is greater than in labor income and shed light on the drivers of economic mobility.
    Keywords: Ability; Skills; Education; Capital income; Wealth
    JEL: D31 H20 J24
    Date: 2023–04–28
  9. By: Mark Bryan (Department of Economics, University of Sheffield, Sheffield S1 4DT, UK.); Andrew Bryce (Department of Economics, University of Sheffield, Sheffield S1 4DT, UK.); Jennifer Roberts (Department of Economics, University of Sheffield, Sheffield S1 4DT, UK.); Cristina Sechel (Department of Economics, University of Sheffield, Sheffield S1 4DT, UK.)
    Abstract: There is a gap between the employment rates of disabled and non-disabled people in the UK, which stood at 33 percentage points in 2019. This Disability Employment Gap (DEG) is a cause for concern in government and among anyone worried about poverty and disadvantage. We aim to better understand the DEG by decomposing it into its constituent parts and constructing counterfactual scenarios to demonstrate how it would change if inequalities in education were eliminated or structural barriers to employment were removed. Our results show that if the average education levels of disabled people could be raised to those of non- disabled people, without changing other characteristics or structural barriers in the labour market, then the DEG could be reduced by just 4pp (12%). However, if structural barriers could be eliminated such that a disabled person with a given level of education has the same probability of employment as a non-disabled person with the same level of education, then the DEG could be reduced by over 28pp (85%), a quarter of which would be achieved through eliminating barriers faced by people with no formal qualifications. These findings challenge the notion that tackling supply side issues alone would substantially reduce the DEG and highlight the continued relevance of barriers in the labour market that are disproportionately hindering the employment prospects of disabled people.
    Keywords: Disability Employment Gap, Decomposition, Education
    JEL: I14 J24 J71
    Date: 2023–04
  10. By: Daniela Ceccon; Marta Kahancová; Monika Martišková; Gabriele Medas; Adam Šumichrast
    Abstract: Collective bargaining is undergoing a transformation to address various emerging issues in European labour markets. These include, for example, questions of job stability and wage depreciation in the energy and inflation crises, changes to working time, accommodating worker needs in the context of the Covid-19 pandemic, seeking a work-life balance among European workers, the mitigation of work-related risks from exposure to political radicalism, work-related migration and the right for equal working conditions for all workers, and last but not least, the increased use of digital technologies for managing worker data and worker surveillance in a fair and transparent way. Based on an extensive literature review and analysis of the content of collective agreements, this report shows how multi-employer bargaining (MEB) can be beneficial for tackling such complex challenges. It presents the arguments in favour of MEB, the benefits for workers, trade unions, employers and for society, the preconditions for its proper functioning, but also the obstacles to MEB as reported across various European countries. The main benefits of MEB include equality, professionalism, efficiency, and conflict prevention are relevant for various kinds of stakeholders – for workers, for unions, for employers, and for the society in general. For workers, MEB secures equality in terms of pay, gender equality, and equal access to a variety of stipulations of their individual working conditions. MEB agreements regulate a broad range of issues to the benefit of workers. Workers know these conditions apply across many employers. For workers’ unions, MEB helps coordinating working conditions, maintaining trade union power and ensure professional bargaining. For employers, MEB offers efficiency and professionalism in bargaining, allows pooling resources of small employers together toward professional collective bargaining. Employers also benefit from equal conditions and do not need to undergo a rats’ race for hiring and maintaining skilled and committed workers, because MEB secures that the same conditions apply also for the competitors. For society as a whole, MEB is beneficial because it strengthens cooperation and democracy. It is also an important governance element that complements public policy and is related to less inequality in society.
    Date: 2023–05–02
  11. By: Kseniya Bortnikova (Institute of Economic Studies, Faculty of Social Sciences, Charles University)
    Abstract: Academic publishing represents a field in which the opportunity for discrimination based on appearance should be limited since intellectual skills must play a key role. In this work, I document the beauty effect for economic scholars. Using unique data on academics who published their research papers in economic journals in 2017 I test whether more attractive academics are more productive. I found evidence that appearance is positively and significantly associated with the success of research output as measured by the higher number of citations. However, the effect magnitude is rather small, and it becomes even smaller when I control for the ranking of the Ph.D. granting institution.
    Keywords: Beauty bias, productivity, discrimination, academic publishing
    JEL: C83 J3 J7 M51
    Date: 2023–04
  12. By: Christian Imboden; John Voorheis; Caroline Weber
    Abstract: We examine the relation between administrative income data and survey reports for self-employed and wage-earning respondents from 2000 - 2015. The self-employed report 40 percent more wages and self-employment income in the survey than in tax administrative records; this estimate nets out differences between these two sources that are also shared by wage-earners. We provide evidence that differential reporting incentives are an important explanation of the larger self-employed gap by exploiting a well-known artifact – self-employed respondents exhibit substantial bunching at the first EITC kink in their administrative records. We do not observe the same behavior in their survey responses even after accounting for survey measurement concerns.
    Keywords: Income Reporting, Survey Accuracy, Measurement Error, Tax Evasion, Tax Avoidance
    JEL: C83 H24 H26
    Date: 2023–04
  13. By: Joseph Richardson
    Abstract: In this paper, we explore the relationship between health risks from COVID-19 and UK labour supply. Using pre-existing conditions as the source of variation in COVID-19 health risks, we show that employment fell by 2 to 3 percentage points with each prior additional condition, after controlling for pre-pandemic labour supply and other relevant factors. These effects begin in April 2020 and persist through to September 2021, long after the pandemic’s peak. Furthermore, these effects were concentrated in jobs difficult to perform remotely, are not driven by labour demand shocks, and similar relationships did not exist prior to the pandemic.
    Keywords: COVID-19, Labour supply, Health risks, Pre-existing conditions, Job separations
    JEL: I12 J40 J22
    Date: 2023
  14. By: Gálvez, Julio; Paz-Pardo, Gonzalo
    Abstract: Households face earnings risk which is non-normal and varies by age and over the income distribution. We show that allowing for these rich features of earnings dynamics, in the context of a structurally estimated life-cycle portfolio choice model, helps to rationalize the limited participation of households in the stock market and their low holdings of risky assets. Because households are subject to more background risk than previously considered, the estimated model implies a substantially lower coefficient of risk aversion. We also find renewed support for rule-of-thumb investment strategies under the model with the nonlinear earnings process. JEL Classification: G11, G12, D14, D91, J24, H06
    Keywords: earnings risk, household finance, simulated method of moments, stock ownership, wealth accumulation
    Date: 2023–04
  15. By: Kosuke Aoki (University of Tokyo); Yoshihiko Hogen (Bank of Japan); Kosuke Takatomi (Bank of Japan)
    Abstract: We estimate price markups and wage markdowns of Japanese firms using a newly constructed dataset of individual firms' financial statements -- which covers about 80 percent of the Economic Census in terms of sales size. We find that Japanese firms have secured profits by increasing markdowns amid a declining trend in markups, which has ultimately led to the stabilization of the labor share in the long run. We also find that this trend has been more pronounced among small firms in the non-manufacturing sector. Comparing our results with the U.S., (1) markdowns have increased in both Japan and the U.S., however, (2) the decline in markups in Japan is in stark contrast to the U.S., where the rise of the so-called superstar firms with strong market power has led to expansions of markups for the whole corporate sector.
    Keywords: Price markup; Wage markdown; Monopsony; Labor share
    JEL: E24 E31 J30 J42 L12
    Date: 2023–04–21

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