nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2023‒06‒12
twenty papers chosen by
Joseph Marchand
University of Alberta

  1. Make Your Own Luck: The Wage Gains from Starting College in a Bad Economy By Bicakova, Alena; Cortes, Guido Matias; Mazza, Jacopo
  2. The Motherhood Wage and Income Traps By Francesca Barigozzi; Helmuth Cremer; Emmanuel Thibault
  3. The Evolution of Labor Market Disparities between Hispanic and non-Hispanic Men: 1970-2019 By Kospentaris, Ioannis; Stratton, Leslie S.
  4. Who Benefits from State Corporate Tax Cuts? A Local Labor Market Approach with Heterogeneous Firms: Further Results By Juan Carlos Suárez Serrato; Owen M. Zidar
  5. The Dynamics of Labour Market Polarization in Chile: An Analysis of the Link Between Technical Change and Informality By Delaporte, Isaure; Peña, Werner
  6. The Labor Market Effects of Occupational Licensing in the Public Sector By Morris M. Kleiner; Wenchen Wang
  7. Global Divergence in the De-routinization of Jobs By Lewandowski, Piotr; Park, Albert; Schotte, Simone
  8. Does Temporary Employment undermine the Quality of Permanent Jobs? By Pollio, Chiara; Landini, Fabio; Prodi, Elena; Arrighetti, Alessandro
  9. Diversity, Equity, and Inclusion By Alex Edmans; Caroline Flammer; Simon Glossner
  10. Weight, Attractiveness, and Gender when Hiring. A Field Experiment in Spain By Catarina Goulão; Juan A.; Francisco Lagos; Dan-Olof Rooth
  11. A North-South Agent Based Model of Segmented Labour Markets. The Role of Education and Trade Asymmetries By Lucrezia Fanti; Marcelo C. Pereira; Maria Enrica Virgillito
  12. Does Artificial Intelligence Help or Hurt Gender Diversity? Evidence from Two Field Experiments on Recruitment in Tech By Mallory Avery; Andreas Leibbrandt; Joseph Vecci
  13. Inflation Strikes Back: The Role of Import Competition and the Labor Market By Mary Amiti; Sebastian Heise; Fatih Karahan; Ayşegül Şahin
  14. Employer Reputation and the Labor Market: Evidence from and By Ke; Ma; Sophie Yanying Sheng; Haitian Xie
  15. The Incidence of the Affordable Care Act’s Dependent Coverage Mandate By Sherry A. Glied; Hansoo Ko
  16. Pay Transparency in Organizations By Amir Habibi
  17. Workplace Automation and Corporate Liquidity Policy By Jessie Jiaxu Wang
  18. International Applicability of Education and Migration Aspirations By Amrita Kulka; Till Nikolka; Panu Poutvaara; Silke Uebelmesser
  19. Workers’ behavior after safety regulations: Impact evaluation of the Spanish Occupational Safety and Health Act By Delgado-Cubillo, Pablo; Martín-Román, Ángel L.
  20. Parental and Student Time Use around the Academic Year By Cowan, Benjamin; Jones, Todd R.; Swigert, Jeffrey

  1. By: Bicakova, Alena (CERGE-EI); Cortes, Guido Matias (York University, Canada); Mazza, Jacopo (Utrecht University)
    Abstract: Using data for nearly 40 cohorts of American college graduates and exploiting regional variation in economic conditions, we show robust evidence of a positive relationship between the unemployment rate at the time of college enrollment and subsequent annual earnings, particularly for women. This positive relationship is not driven by selection into employment or by economic conditions at the time of labor market entry. It also cannot be explained by differential sorting into college majors or post-graduate education. Up to one third of the effect is accounted for by sorting towards more remunerative locations. The results are consistent with a behavioral change that induces individuals who experience bad economic times at the beginning of their studies to exert more effort toward obtaining higher paying jobs.
    Keywords: business cycle, higher education, cohort effects
    JEL: I23 J24 J31 E32
    Date: 2023–04
  2. By: Francesca Barigozzi; Helmuth Cremer; Emmanuel Thibault
    Abstract: We present a simple dynamic model based on on-the-job human capital accumulation affecting the dynamic of wage rates and labor earnings. We show how these dynamics are determined by the interplay between the supply and demand sides of the labor market. The model can generate and explain the different dynamics of women’s earnings after childbirth documented in the empirical literature on child penalties. We show that the temporary negative shock in labor supply due to childbearing may create a wage trap and a permanent divergence of labor earnings between genders. Even when the wage trap is avoided, and working mothers are on a path toward a high-wage equilibrium, slow convergence can permanently lose earnings. We use this model to study the impact of different policies on the gender wage gap and child penalties. We show that mandatory maternal leave exacerbates the shock which pleads against long leaves. Similarly, cash transfers to mothers via the income effect on labor supply aggravate gender wage differences. By contrast, temporary subsidies to mothers’ wages (possibly in the form of Income Tax Credits) are not only useful to exit the wage trap, but also to speed up recovery and reduce the child penalty when the shock in labor supply is small enough to avoid the wage trap. Other family policies, like formal child-care subsidies and in-kind provision of formal childcare, are potentially useful because they reduce the mothers’ cost of labor supply, but they affect mothers’ choices only indirectly.
    Keywords: child penalty, mothers’ earnings dynamics, multiple equilibria, wage and income traps
    JEL: J31 H24
    Date: 2023
  3. By: Kospentaris, Ioannis; Stratton, Leslie S.
    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, disparities, earnings, employment, education, immigration
    JEL: J15 J21 J31 J71
    Date: 2023
  4. By: Juan Carlos Suárez Serrato; Owen M. Zidar
    Abstract: This paper estimates the incidence of state corporate taxes using new data and methods for estimating the effects on profits. We extend Suarez Serrato and Zidar (2016) by developing two new identification approaches that use the effects of business taxes on the labor demand of incumbent firms and local productivity to identify profit effects. We estimate these reduced-form effects using data from Census, show how reduced-form moments identify incidence and parameters, and provide incidence estimates using a variety of reduced-form approaches as well as a structural model. Across these approaches, we find that owners bear a substantial portion of incidence. Our central estimate is that firm owners bear half of the incidence, while workers and landowners bear 35-40 percent and 10-15 percent, respectively.
    JEL: H22 H25 H32 H71 J23 R30 R58
    Date: 2023–05
  5. By: Delaporte, Isaure; Peña, Werner
    Abstract: In spite of the growing literature on polarization, relatively little is known about the individual-level patterns underlying the decline of routine occupations and its link with informal employment in a middle-income country context. To shed light on this, we examine the ows of formal and informal workers into and out of routine and non-routine occupations over the period 1980-2015 in Chile. Using rich longitudinal data from the Social Protection Survey of Chile, we first reconstruct individuals' occupational trajectories by classifying individuals into different states at a monthly frequency. We then use a series of multilevel competing risk event history models and a decomposition ow approach to study the ows underlying the decline of routine occupations over time. Our results suggest a process of displacement and occupational downgrading for routine manual workers: workers in routine manual formal employment become increasingly unemployed or use informality as a buffer against job loss, and workers in routine manual informal employment become unemployed or transit to non-routine manual informal occupations. By contrast, workers in routine cognitive occupations seem to be relatively more protected against job displacement and occupational downgrading. Lastly, we find that the decrease in the share of routine occupations in Chile is mostly due to a decrease in the in ow transition rate from unemployment as well as an increase in the out ow transition rates to unemployment and informality.
    Keywords: Occupations, Tasks, Routinization, Labour Market Displacement, Unemployment, Informality
    JEL: E24 E26 J21 J23 J24 O30
    Date: 2023
  6. By: Morris M. Kleiner; Wenchen Wang
    Abstract: In the U.S., occupational licensing is more prevalent in the public sector than in the private sector, but the influence of occupational regulation for public sector workers has not been analyzed in detail. Our study initially examines the probability of a licensed worker selecting into the public sector. Using the probability as a control for these individuals’ risk aversion, we next examine how licensing impacts key labor market outcomes, such as wages, hours worked, and employment in the public sector. Our results show that having an occupational license increases the likelihood of working in the public sector. After adjusting for the selection bias of choosing into the public sector, we find that being in a licensed occupation in the public sector raises wages by about 6% and increases hours worked, but reduces employment, even when controlling for other labor market institutions that also are more prevalent in the public sector such as unionization. Overall, our estimates suggest that the social welfare effects of licensing in the public sector are like those for the whole sample, and they generally result in a welfare loss in the public sector.
    JEL: J08 J38 J44 J48 K23 K31
    Date: 2023–05
  7. By: Lewandowski, Piotr (Institute for Structural Research); Park, Albert (Asian Development Bank); Schotte, Simone (United Nations–University World Institute for Development Economics Research)
    Abstract: This study introduces a methodology to estimate the economy-specific task content of occupations across economies at different income levels. Combining these with employment data in 87 economies, the results show that occupations in low- and middle-income economies are more routine-intensive than in high-income economies, which is attributed to lower technology use in less-developed economies. Non-routine work continues to dominate in high-income economies while routine work remains in low-income and middle-income economies. These findings, using economy-specific estimates of occupational task content, contradict the assumption based on conventional measures that task content of occupations is converging globally. The finding of divergent trends in the relative routine intensity of work in developed and developing economies has important policy implications. Investment in skills, technology use, and participation in global value chains are key factors for work content and productivity to converge with those in high-income economies. The assumption that occupations are converging globally may also overestimate the role of routine-replacing technological change in explaining wage inequality in low- or middle-income economies.
    Keywords: occupational task content; routine-task intensity; skills; jobs divergence; wage inequality
    JEL: J24 J31 O14 O15
    Date: 2023–05–12
  8. By: Pollio, Chiara; Landini, Fabio; Prodi, Elena; Arrighetti, Alessandro
    Abstract: Standard screening and core-periphery theories claim that temporary employment does not undermine the quality of permanent jobs. In contrast, organizational approaches suggest that firms use temporary contracts to pursue low-road employment strategies, which involve the creation of cheap and low quality jobs also for permanent employees. We test these predictions by matching administrative data at the occupation, worker and firm level from the Emilia Romagna region (Italy). Job quality is measured through non-wage occupation-specific factors capturing self-realisation, recognition and social support. Baseline and IV estimates show that a larger use of temporary employees is associated with permanent jobs of lower quality. Moreover, in firms using more temporary workers the jobs of permanent employees are more routinized and less complex. Also, in such firms, permanent workers hold occupations that receive less training and involve less teamwork. These results suggest that where temporary work is used, the low quality of permanent positions is driven by work arrangements that tend to economize on individual skills and competences, which is consistent with the low-road employment hypothesis. Related managerial and policy implications are discussed.
    Keywords: job quality, temporary employment, skills, labour market institutions
    JEL: D22 J28 J41 L23
    Date: 2023
  9. By: Alex Edmans; Caroline Flammer; Simon Glossner
    Abstract: This paper measures diversity, equity, and inclusion (DEI) using proprietary data on survey responses used to compile the Best Companies to Work For list. We identify 13 of the 58 questions as being related to DEI, and aggregate the responses to form our DEI measure. This variable has low correlation with gender and ethnic diversity in the boardroom, in senior management, and within the workforce, suggesting that DEI captures additional dimensions missing from traditional measures of demographic diversity. DEI is also unrelated to general workplace policies and practices, suggesting that DEI cannot be improved by generic initiatives. However, DEI is higher in small growth firms and firms with high financial strength. DEI is associated with higher future accounting performance across a range of measures, higher future earnings surprises, and higher valuation ratios, but demographic diversity is not. DEI perceptions among professional workers, such as R&D employees, are significantly correlated with the number and quality of patents. However, DEI exhibits no link with future stock returns.
    JEL: D63 G12 G32 J53 J71 J81
    Date: 2023–05
  10. By: Catarina Goulão (Toulouse School of Economics, INRAE, University Toulouse Capitole.); Juan A. (Department of Economic Theory and Economic History, University of Granada.); Francisco Lagos (Department of Economic Theory and Economic History, University of Granada.); Dan-Olof Rooth (Stockholm University, IZA.)
    Abstract: Being overweight or obese is associated with lower employment and earnings, possibly arising from employer discrimination. A few studies have used field experiments to show that obese job applicants are, in fact, discriminated against in the hiring process. However, whether overweight job applicants also face employer discrimination is still an open question. To this end, we have designed a correspondence testing experiment in which fictitious applications are sent to real job openings across twelve different occupations in the Spanish labor market. We compare the callback rate for applications with a facial photo of a normal weight person to the one for applications with a photo of the same person manipulated into looking overweight. Applications with a photo of the weight-manipulated male receive significantly fewer callbacks for a job interview compared to normal weight, and this differential treatment is especially pronounced in female-dominated occupations. For women, we find the opposite result. Weight-manipulated female applications receive slightly more callbacks, especially in female-dominated occupations. Our experimental design allows us to disentangle whether employers act on attractiveness or weight when hiring. For men, the weight manipulation effect is explained by an attractiveness premium, while for women we find evidence of an attractiveness penalty, as well as a weight penalty, in explaining the effect.
    Keywords: : Obesity, overweight, gender, attractiveness, hiring, correspondence testing
    JEL: J64 J71
    Date: 2023–05–06
  11. By: Lucrezia Fanti (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italia); Marcelo C. Pereira (Institute of Economics, University of Campinas, Campinas, Brazil); Maria Enrica Virgillito (Institute of Economics, Scuola Superiore Sant’Anna, Pisa, Italia)
    Abstract: Drawing on the labour-augmented K+S agent-based model, this paper develops a two-country North-South ABM wherein the leader and the laggard country interact through the international trade of capital goods. The model aims to address sources of asymmetries and possible converge patterns between two advanced economies that are initially differentiated in terms of the education level they are able to provide. Education is modeled as a national-level policy differently targeting the three usual levels, that is primary, secondary and tertiary. After being educated and entering the labour force, workers face a segmented market, divided into three types of job qualification, and the resulting position levels inside firms, i.e., elementary, technical and professional occupations. The three resulting labour market segments are heterogeneous in terms of both requested education level and offered wages. To address the role of trade and education, we experiment with different education-policy and trade settings. Ultimately, we are interested in understanding the coupling effects of asymmetries in education, which reverberate in segmented labour markets and differentiated growth patterns. Notably, our focus on capital-goods trade, rather than consumption goods, allows us to assess a direct link between productive capabilities in producing complex products and country growth prospects.
    Keywords: Agent-Based Model, Education, International Trade, Technology Gap, Labour Market
    JEL: C63 J3 E24 O1
    Date: 2023–05
  12. By: Mallory Avery (Department of Economics, Monash Business School, Monash University); Andreas Leibbrandt (Department of Economics, Monash Business School, Monash University); Joseph Vecci (Gothenburg University, Vasagatan, Gothenburg, Sweden)
    Abstract: The use of Artificial Intelligence (AI) in recruitment is rapidly increasing and drastically changing how people apply to jobs and how applications are reviewed. In this paper, we use two field experiments to study how AI in recruitment impacts gender diversity in the male-dominated technology sector, both overall and separately for labor supply and demand. We find that the use of AI in recruitment changes the gender distribution of potential hires, in some cases more than doubling the fraction of top applicants that are women. This change is generated by better outcomes for women in both supply and demand. On the supply side, we observe that the use of AI reduces the gender gap in application completion rates. Complementary survey evidence suggests that this is driven by female jobseekers believing that there is less bias in recruitment when assessed by AI instead of human evaluators. On the demand side, we find that providing evaluators with applicants’ AI scores closes the gender gap in assessments that otherwise disadvantage female applicants. Finally, we show that the AI tool would have to be substantially biased against women to result in a lower level of gender diversity than found without AI.
    Keywords: Artificial Intelligence, Gender, Diversity, Field Experiment
    JEL: C93
    Date: 2023–05
  13. By: Mary Amiti; Sebastian Heise; Fatih Karahan; Ayşegül Şahin
    Abstract: U.S. inflation has recently surged, with inflation reaching its highest readings since the early 1980s. We examine the drivers of this rise in inflation, focusing on supply chain disruptions, labor supply constraints, and their interaction. Using a calibrated two-sector New Keynesian DSGE model with multiple factors of production, foreign competition, and endogenous markups, we find that supply chain disruptions combined with a rise in the disutility of work raised inflation by about 2 percentage points in the 2021-22 period. We show that the combined shock increased price inflation in the model by 0.6 percentage point more than it would have risen if the shocks had hit separately. This amplification arises because the joint shock to labor and imported input prices makes substituting between labor and intermediates less effective for domestic firms. Moreover, the simultaneous foreign competition shock allows domestic producers to increase their pass-through into prices without losing market share. We then show that the benefit of aggressive monetary policy in the model depends on the source of the rise in inflation. If the rise in inflation is demand-driven, then aggressive monetary tightening can contain inflation without a recession later. In contrast, aggressive policy can have a large negative effect on the labor market when inflation is driven by supply chain and labor market disruptions. We use aggregate and industry-level data on producer prices, wages, and input prices to provide corroborating evidence for the key amplification channels in the model.
    JEL: E24 E31
    Date: 2023–05
  14. By: Ke (Amy); Ma; Sophie Yanying Sheng; Haitian Xie
    Abstract: How does employer reputation affect the labor market? We investigate this question using a novel dataset combining reviews from and job applications data from Labor market institutions such as crowd-sources information about employers to alleviate information problems faced by workers when choosing an employer. Raw crowd-sourced employer ratings are rounded when displayed to job seekers. By exploiting the rounding threshold, we identify the causal impact of Glassdoor ratings using a regression discontinuity framework. We document the effects of such ratings on both the demand and supply sides of the labor market. We find that displayed employer reputation affects an employer's ability to attract workers, especially when the displayed rating is "sticky." Employers respond to having a rating above the rounding threshold by posting more new positions and re-activating more job postings. The effects are the strongest for private, smaller, and less established firms, suggesting that online reputation is a substitute for other types of reputation.
    Date: 2023–05
  15. By: Sherry A. Glied; Hansoo Ko
    Abstract: Economic theory and empirical studies conclude that the cost of voluntary employer-sponsored health insurance falls on employees. However, the distribution of incidence and the mechanism through which incidence occurs have not been well-established. We provide new evidence about incidence by examining the dependent coverage mandate in the ACA, which requires group insurance to allow adult children to age 26 to remain on their parents’ policies. We establish that the incidence of the mandate fell on covered employees as a group. We then consider three situations in which the benefits of this new coverage to an employee differ from the costs to an employer. First, we compare incidence where the young adult dependent is the youngest child in the family to the situation where the child is not the youngest (so the family could add a dependent to existing family coverage). We find that incidence falls mainly on households where the newly-eligible child is the youngest in the household. Second, higher-income households face a lower tax price of coverage than do lower-income households. We find that the incidence of the mandate falls mainly on the highest income households. Finally, we find that the mandate leads to increased commuting time for parents of newly-eligible dependents.
    JEL: H29 I13 J33
    Date: 2023–05
  16. By: Amir Habibi (HU Berlin)
    Abstract: I study when a firm prefers to be transparent about pay using a simple multidimensional signaling model. Pay transparency within the firm means that a worker can learn about his own worker-firm match from another worker’s pay. This can either encourage or discourage workers—which affects retention—and so creates a trade-off for the firm when it commits to a level of transparency. The model pre- dicts that when few workers have a high worker-firm match, transparency is always preferred by the firm and becomes more favorable as the value of retaining these ‘star’ workers increases. This prediction is consistent with the firms in the field that choose to be internally transparent about pay. The model also predicts that transparency leads to pay compression, again consistent with evidence from the field.
    Keywords: pay transparency; bonus pay; multidimensional signaling; relative pay;
    JEL: D82 D86 J30 M52
    Date: 2023–05–10
  17. By: Jessie Jiaxu Wang
    Abstract: Using an occupational probability of computerization, we measure a firm’s ability to replace labor with automated capital. Our evidence suggests that the potential to automate a workforce enhances operating flexibility, allowing firms to hold less precautionary cash. To provide evidence for this mechanism, we exploit the 2011–2012 Thailand hard drive crisis as an exogenous shock to the cost of automation. In addition, the negative relation between prospective automation and cash holdings is greater for firms with a lower expected cost of worker displacement and greater labor-induced operating leverage.
    Keywords: Automation; Operating flexibility; Corporate liquidity policy; Substitutability of labor with automated capital; Labor-induced operating leverage
    JEL: G32 G35 J23 O33
    Date: 2023–04–18
  18. By: Amrita Kulka; Till Nikolka; Panu Poutvaara; Silke Uebelmesser
    Abstract: We analyze perceptions of international applicability of one’s education and migration aspirations and intentions among university students in Czechia, India, Indonesia, Italy, Mexico, the Netherlands, and Spain. Students in law perceive their education least internationally applicable. Perceived international applicability strongly predicts migration aspirations and intentions also after controlling for study fields, individual characteristics, and university fixed effects. Furthermore, among those not studying law, hours spent studying are increasing with perceived international applicability of one’s education. Our findings are consistent with predictions from a model in which students invest in their education before learning their mobility status. .
    Keywords: education, migration, migration aspirations
    JEL: F22 I21 J24
    Date: 2023
  19. By: Delgado-Cubillo, Pablo; Martín-Román, Ángel L.
    Abstract: While the 1995 Occupational Safety and Health Act (OSH) regulation transformed the outlook on workplaces in Spain, characterized by a lack of preventive protection, public statistics have reported an increasing trend in the postregulation workplace accident rates. This study uses microdata from official national statistics to examine the effect of the OSH regulation on the reported accidents while focusing on its severity. Accordingly, we apply a difference-in-difference assessment method where a comparable group is formed by the contemporaneous in itinere accidents (commuting), which are legally and statistically considered work-related accidents but not directly impacted by the OSH regulation, with a focus on the workplace environment. The results reveal that the nonfatal accident rate decreased after the implementation of the regulation. However, when we isolate the effect of the regulation on accidents that usually provoke hard-to-diagnose injuries (dislocations, back pain, sprains, and strains), we obtain a significant increase in the accident rate. Moral hazard mixed effects seem to have played a crucial role in these dynamics through overreporting and/or Peltzman effects, often offsetting accident reduction intended by the OSH regulation.
    Keywords: OSH, impact evaluation, moral hazard, difference-in-difference
    JEL: D04 H43 I18 J28 K31
    Date: 2023
  20. By: Cowan, Benjamin (Washington State University); Jones, Todd R. (Mississippi State University); Swigert, Jeffrey (Southern Utah University)
    Abstract: We demonstrate how mothers, fathers, and 15–17-year-old students alter their schedules around the K-12 academic year. Using regression discontinuity (RDD) methods, combined with dates on school year start and end dates by locality, we document several notable results. First, mothers are substantially more affected by the school year than are fathers. When school is in session, mothers sleep less, spend more time caring for family members and driving them around, and spend less time on eating, free time and exercise. Fathers see changes that are generally similar in sign but smaller in magnitude compared to mothers. 15–17-year-olds naturally reduce time spent in educational pursuits when school is out (a decrease of about 5.5 hours per day on weekdays), and most of that time is substituted toward free time (an additional 2+ hours per day) and sleep (1+ hours per day). Our results provide a holistic picture of how families build their days around the K-12 school calendar and have implications for policies targeted toward women's and teenage children's health and well-being.
    Keywords: parent time use, student time use, regression discontinuity
    JEL: I2 I1 J2 D1
    Date: 2023–04

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