nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2023‒07‒10
twenty papers chosen by
Joseph Marchand
University of Alberta

  1. Minimum Wages, Productivity, and Reallocation By Haelbig, Mirja; Mertens, Matthias; Müller, Steffen
  2. Campaign Connections By Samuel Bazzi; Claudio Labanca
  3. Forward-Looking Labor Supply Responses to Changes in Pension Wealth: Evidence from Germany By Elisabeth Artmann; Nicola Fuchs-Schündeln; Giulia Giupponi
  4. Cognitive Skills among Adults: An Impeding Factor for Gender Convergence? By Michele Battisti; Alexandra Fedorets; Lavinia Kinne
  5. Labour Costs and the Decision to Hire the First Employee By Bart Cockx; Sam Desiere
  6. Heterogeneity and Wage Growth of Full-time Workers in Japan: An Empirical Analysis Using Micro Data By Daiki Date; Takushi Kurozumi; Takashi Nakazawa; Yu Sugioka
  7. The demand for language skills in the European labour market: Evidence from online job vacancies By Gabriele Marconi; Francesca Borgonovi; Loris Vergolini
  8. The anatomy of competitiveness By Thomas Buser; Hessel Oosterbeek
  9. The OECD Skills Profiling Tool: A new instrument to improve career decisions By Michele Tuccio; Katharine Mullock; Patricia Navarro-Palau; Erika Xiomara Chaparro Perez
  10. Effects of the Minimum Wage on the Nonprofit Sector By Jonathan Meer; Hedieh Tajali
  11. Temperature and Joint Time Use By Cosaert, Sam; Nieto, Adrián; Tatsiramos, Konstantinos
  12. Discrete Labor Supply: Quasi-Experimental Evidence and Implications By Tuomas Kosonen; Tuomas Matikka
  13. Job Creation and Job Destruction Dynamics in the U.S. Truck Transportation Industry, 1995-2019 By Miller, Jason W.; Phares, Jonathan; Burks, Stephen V.
  14. Air Pollution, Smoky Days and Hours Worked By Ron Chan; Martino Pelli; Veronica Vienne
  15. The Evolution of Platform Gig Work, 2012-2021 By Andrew Garin; Emilie Jackson; Dmitri K. Koustas; Alicia Miller
  16. Innovation and the Labor Market: Theory, Evidence and Challenges By Nicoletta Corrocher; Daniele Moschella; Jacopo Staccioli; Marco Vivarelli
  17. Helping and Antisocial Behavior in the Workplace By Haylock, Michael; Kampkötter, Patrick; Kosfeld, Michael; von Siemens, Ferdinand
  18. Incentives, Health, and Retirement - Evidence from a Finnish Pension Reform By Joonas Ollonqvist; Kaisa Kotakorpi; Mikko Laaksonen; Pekka Martikainen; Jukka Pirttilä; Lasse Tarkiainen
  19. Socioemotional Development during Adolescence: Evidence from a Large Macro Shock By Azmat, Ghazala; Kaufmann, Katja Maria; Özdemir, Yasemin
  20. Does Access to Citizenship Confer Socio-Economic Returns? Evidence from a Randomized Control Design By Hainmueller, Jens; Cascardi, Elisa; Hotard, Michael; Koslowski, Rey; Lawrence, Duncan; Yasenov, Vasil; Laitin, David D.

  1. By: Haelbig, Mirja (IWH Halle); Mertens, Matthias (IWH Halle); Müller, Steffen (IWH Halle)
    Abstract: We study the productivity effect of the German national minimum wage by applying administrative firm data. At the firm level, we confirm positive effects on wages and negative employment effects and document higher productivity even net of output price increases. We find higher wages but no employment effects at the level of aggregate industry×region cells. The minimum wage increased aggregate productivity in manufacturing. We do not find that employment reallocation across firms contributed to these aggregate productivity gains, nor do we find improvements in allocative efficiency. Instead, the productivity gains from the minimum wage result from within-firm productivity improvements only.
    Keywords: minimum wage, firm productivity, output prices, factor reallocation
    JEL: L11 L25 J31 D24
    Date: 2023–05
  2. By: Samuel Bazzi; Claudio Labanca
    Abstract: This paper explores the labor market returns to working on a victorious political campaign. Using unique administrative data from Brazil, we track the earnings and employment of campaign workers before and after close elections spanning nearly 20 years. We identify sizable returns to working for a winning campaign, especially in areas with a large informal sector and for workers connected to newly elected challengers. The returns are concentrated in the public sector, where connected hires are relatively more qualified. Our results suggest a potential upside to patronage as campaign connections create new pathways to public administration for young, high-ability workers.
    JEL: D72 D73 J45 J46 O17 P00
    Date: 2023–05
  3. By: Elisabeth Artmann; Nicola Fuchs-Schündeln; Giulia Giupponi
    Abstract: We provide new evidence of forward-looking labor supply responses to changes in pension wealth. We exploit a 2014 German reform that increased pension wealth for mothers by an average of 4.4% per child born before January 1, 1992. Using administrative data on the universe of working histories, we implement a difference-in-differences design comparing women who had their first child before versus after January 1, 1992. We document significant reductions in labor earnings, driven by intensive margin responses. Our estimates imply that, on average, an extra euro of pension wealth in a given period reduces unconditional labor earnings by 54 cents.
    Keywords: labor supply, social security, pension wealth
    JEL: H55 J22 J26
    Date: 2023
  4. By: Michele Battisti; Alexandra Fedorets; Lavinia Kinne
    Abstract: While gender differences in labor force participation and wages have been studied extensively, gender gaps in cognitive skills among adults are not yet well understood. Using the PIAAC dataset, this paper presents novel findings on cognitive skill distributions by gender across 34 countries. Despite increasing educational equality, inequalities in numeracy skills favoring men compared to women are pervasive. These skill differences account for a sizable part of the gender wage gap. Furthermore, there are larger disadvantages for women at the top of the wage distribution, which are complemented by lower returns to skills compared to men. We also find that these numeracy-wage patterns are especially pronounced for parents and for those with the highest degree in a non-STEM field of study.
    Keywords: gender wage gap, skills, numeracy, PIAAC
    JEL: I24 J16 J24
    Date: 2023
  5. By: Bart Cockx; Sam Desiere
    Abstract: Firms without paid employees account for up to 80% of all firms, but only a small minority ever hires. This paper investigates the relationship between labour costs and the decision to hire a first employee and become an employer. Leveraging a unique policy in Belgium that permanently reduced the labour cost of the first employee by 13%, we find that the number of new, first-time employers jumped by 31% immediately following the reform. The elasticity of the probability to hire the first employee with respect to the labour cost is −2.39 [95% CI: −3.45, −1.25].
    Keywords: nonemployers, hiring decisions, payroll taxes, small businesses
    JEL: D22 H25 J08 J23 L26 M13
    Date: 2023
  6. By: Daiki Date (Bank of Japan); Takushi Kurozumi (Bank of Japan); Takashi Nakazawa (Bank of Japan); Yu Sugioka (Bank of Japan)
    Abstract: In this paper we examine the driving forces behind fluctuations in wage growth of full-time workers in Japan, taking into account the heterogeneity of wage structures among the workers, using micro data including those from the Basic Survey on Wage Structure. Specifically, we first divide the workers into two classes with distinct wage structures, based on a finite mixture model estimated using various characteristics of the workers and the firms they work for. We find that the two classes correspond to what previous studies have called an "internal labor market, " where, under long-term employment practices, labor is reallocated within firms and wages follow a seniority-based system, and an "external labor market, " where labor moves across firms and wages are mainly determined by supply and demand in the market. We next analyze the effects of economic factors on individual full-time workers' wage growth rates. We show that, in the internal labor market, neither labor market conditions at the industry and firm-size level nor the output gap at the macro level have had an effect on the wage growth rates in recent years, while higher potential growth has had a positive effect. By contrast, in the external and the overall labor markets, improvements in labor market conditions and the output gap have accelerated the wage growth rates, even in recent years.
    Keywords: Full-time worker; Heterogeneity of wage structures; Internal and external labor markets
    JEL: E24 J30 J40
    Date: 2023–06–19
  7. By: Gabriele Marconi; Francesca Borgonovi; Loris Vergolini
    Abstract: This paper investigates the demand for language skills using data on online job vacancies in 27 European Union member countries and the United Kingdom in 2021. Evidence indicates that although Europe remains a linguistically diverse labour market, knowing English confers unique advantages in certain occupations. Across countries included in the analyses, a knowledge of English was explicitly required in 22% of all vacancies and English was the sixth most required skill overall. A knowledge of German, Spanish, French and Mandarin Chinese was explicitly demanded in between 1% and 2% of all vacancies. One in two positions advertised on line for managers or professionals required some knowledge of English, on average across European Union member countries and across OECD countries in the sample. This compares with only one in ten positions for skilled agricultural, forestry and fishery workers and among elementary occupations.
    JEL: J20 J24 R10
    Date: 2023–06–14
  8. By: Thomas Buser (University of Amsterdam); Hessel Oosterbeek (University of Amsterdam)
    Abstract: A large empirical literature in behavioral economics investigates heterogeneity across individuals and groups in preferences for competition. In this study, we provide a more detailed view on competitiveness by differentiating between four different motivations for entering competitions – enjoyment of competition, desire to win, competition for personal development, and general challenge seeking. We investigate which of these dimensions are picked up by traditional measures of competitiveness; how they predict individual and gender differences in career outcomes including income, holding a leadership position, and entrepreneurship; how they predict wellbeing; and how they relate to other personality traits, skills, and preferences.
    Keywords: competitiveness, personality traits, labor market outcomes, leadership, gender
    JEL: C92 D91 J24
  9. By: Michele Tuccio; Katharine Mullock; Patricia Navarro-Palau; Erika Xiomara Chaparro Perez
    Abstract: This paper documents the development and piloting of the OECD Skills Profiling Tool. The OECD Skills Profiling Tool assesses three types of skills: occupation-specific skills; foundational skills (literacy, numeracy and digital skills); and a set of noncognitive skills using academically validated self-reported tests. After completion of the assessment, the OECD Skills Profiling Tool generates two sets of results: a personalised skill profile, which can be benchmarked against other users; and a list of suggested occupations that make use of those skills. In December 2021, 270 users and 38 career guidance counsellors in Chile, Colombia, Mexico and Peru tested the OECD Skills Profiling Tool. This paper describes the selection of assessment instruments, the methodology used to generate the results provided by the OECD Skills Profiling Tool and the outcomes of the piloting phase of the tool.
    JEL: I24 J24 J63
    Date: 2023–06–13
  10. By: Jonathan Meer; Hedieh Tajali
    Abstract: The nonprofit sector’s ability to absorb increases in labor costs differs from the private sector in a number of ways. We analyze how nonprofits are affected by changes in the minimum wage utilizing data from the Bureau of Labor Statistics and the Internal Revenue Service, linked to state minimum wages. We examine changes in reported employment and volunteering, as well as other financial statements such as revenues and expenses. The results from both datasets show a negative impact on employment for states with large statutory minimum wage increases. We observe some evidence for a reduction in the number of nonprofit establishments, fundraising expenses, and revenues from contributions.
    JEL: H42 J3 J40 J48
    Date: 2023–05
  11. By: Cosaert, Sam (University of Antwerp); Nieto, Adrián (University of Nottingham); Tatsiramos, Konstantinos (University of Luxembourg, LISER)
    Abstract: We combine exogenous variation in temperature at the county-day level in the U.S. with daily time use data to examine the effect of temperature on joint time use. We show that low temperatures reduce time spent with friends but increase time spent with family. Conversely, high temperatures increase time alone but reduce time with family. We also provide evidence of the effect of temperature on joint time use being location-dependent. We rationalize this finding using a model in which the chosen time allocation is the outcome of a dual-self decision process with an indoor and an outdoor self. The two selves have different tastes for time alone, time with family, and time with friends. Weather conditions can change the influence of each self, and thereby the corresponding preferences for joint time use. We test the predictions of the model empirically by drawing on methods from the household economics literature. The test results support the hypothesis that weather affects joint time use insofar it affects where the activities take place.
    Keywords: temperature, joint time use, social interactions, dual-self model, indoors, outdoors
    JEL: D70 I31 J22 Q51 Q54
    Date: 2023–05
  12. By: Tuomas Kosonen (VATT Institute for Economic Research, Finnish Centre of Excellence in Tax Systems Research (FIT)); Tuomas Matikka (VATT Institute for Economic Research, CESifo)
    Abstract: We provide quasi-experimental evidence of discrete labor supply. We utilize a novel institutional setting where a reform shifted an income notch to a higher income level, and compare earnings distributions of treated and non-treated individuals before and after the reform. We find transparent evidence of widespread changes in the earnings distribution, which is consistent with discrete but not continuous labor supply. We present a simple application for estimating changes in a distribution to detect discrete responses to local tax changes.
    Keywords: discrete labor supply, tax elasticity, distributions
    JEL: J22 H24 H21
    Date: 2023–04
  13. By: Miller, Jason W. (Michigan State University); Phares, Jonathan (Ivy College of Business); Burks, Stephen V. (University of Minnesota, Morris)
    Abstract: Every year, approximately 27% of all jobs in the U.S. truck transportation sector (NAICS 484) are reshuffled across motor carriers as existing carriers grow or shrink, new entrants begin operations, and existing firms exit. Studying how these dynamics unfold, especially for young carriers, is critical to further our understanding of employment dynamics in the U.S. trucking industry. This manuscript takes a first look at job creation and job destruction dynamics in truck transportation, with a special emphasis on the roles of carrier age and on job creation and destruction dynamics in the manufacturing sector, the source of demand for most trucking ton-miles. In doing so, we draw on and extend theory in both supply chain management and economics. We test our predictions using archival data from the U.S. Census Bureau's Business Dynamics Statistics program that tracks the universe of truck transportation firms with employee establishments from 1995 through 2019, focusing on firms that are ten years old or younger. Results from fitting a series of linear mixed effects models provide strong evidence that job creation and job destruction dynamics at trucking firms decline rapidly as carriers age. We further find these age-related dynamics are moderated by employment dynamics in the manufacturing sector. We discuss implications of these findings for theory and practice.
    Keywords: job creation, job destruction, motor carrier, U.S. trucking industry, business dynamics statistics
    JEL: J21 J63 L92
    Date: 2023–05
  14. By: Ron Chan; Martino Pelli; Veronica Vienne
    Abstract: The current literature on the economic cost of air pollution in the labor market primarily focuses on labor productivity, leaving the impact on working hours relatively unexplored. In this paper, we investigate the effects of air pollution on work hours using a nationally representative sample for Chile. To address the potential endogeneity of air pollution, we leverage the exogenous occurrence of wildfires between 2010 and 2018. We construct the smoke plumes originating from each wildfire to identify the causal impact of air pollution on hours worked. Our analysis reveals that an exogenous increase in fine particulate matter resulting from an extra smoky day leads to a 2% reduction in work hours for the average Chilean worker. The impact is more pronounced for male workers engaged in outdoor tasks, such as agriculture, and for economically disadvantaged households, where the negative effects of air pollution can be up to four times larger. Our findings imply that earlier studies focusing only on labor productivity may be underestimating the effect of air pollution on economic output by 11-13%. La littérature actuelle sur le coût économique de la pollution de l'air sur le marché du travail se concentre principalement sur la productivité du travail, laissant l'impact sur les heures de travail relativement inexploré. Dans cet article, nous étudions les effets de la pollution de l'air sur les heures de travail en utilisant un échantillon national représentatif du Chili. Pour traiter l'endogénéité potentielle de la pollution de l'air, nous tirons parti de l'occurrence exogène des incendies de forêt entre 2010 et 2018. Nous construisons les panaches de fumée provenant de chaque incendie afin d'identifier l'impact causal de la pollution de l'air sur les heures travaillées. Notre analyse révèle qu'une augmentation exogène des particules fines résultant d'une journée de fumée supplémentaire entraîne une réduction de 2 % des heures de travail pour le travailleur chilien moyen. L'impact est plus prononcé pour les hommes qui travaillent à l'extérieur, comme dans l'agriculture, et pour les ménages économiquement défavorisés, où les effets négatifs de la pollution de l'air peuvent être jusqu'à quatre fois plus importants. Nos résultats impliquent que les études antérieures axées uniquement sur la productivité du travail pourraient sous-estimer de 11 à 13 % l'effet de la pollution de l'air sur la production économique.
    Keywords: air pollution, hours worked, wildfires, Chile, pollution de l'air, heures travaillées, incendies de forêt, Chili
    JEL: Q53 J20 J22 O13 I15
    Date: 2023–06–12
  15. By: Andrew Garin; Emilie Jackson; Dmitri K. Koustas; Alicia Miller
    Abstract: We document the dynamics of tax-based measures of work mediated by online platforms from 2012 through 2021. We present a measurement framework to account for high reporting thresholds on some information returns using returns from states with lower reporting thresholds to provide a more complete estimate of total platform work. Updating data through 2021 allows us to provide the most comprehensive estimates of the COVID-19 pandemic on tax filing behavior. We find that the number of workers receiving information returns not subject to the 1099-K gap increased dramatically during the pandemic, with least 5 million individuals receiving information returns from platform gig work by 2021, nearly all from transportation platforms. We present evidence that the availability of expanded unemployment insurance benefits resulted in many individuals who were platform workers in 2019 not reporting any self-employment income in 2020-2021. At the same time, other services done by platform gig workers increased dramatically by at least 3.1 million people between 2019 and 2021. Interestingly, the broader 1099-contract economy follows a different trend, declining during this period, suggesting the challenges for tax administration are largely concentrated among platform gig workers, at least through 2021.
    JEL: H24 J21 J41 J46 M13 Y1
    Date: 2023–05
  16. By: Nicoletta Corrocher (ICRIOS, Università Bocconi, Milano, Italy); Daniele Moschella (Institute of Economics, Scuola Superiore Sant’Anna, Pisa, Italy); Jacopo Staccioli (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italy – Institute of Economics, Scuola Superiore Sant’Anna, Pisa, Italy); Marco Vivarelli (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italy – UNU-MERIT, Maastricht, The Netherlands – IZA, Bonn, Germany)
    Abstract: This paper deals with the complex relationship between innovation and the labor market, analyzing the impact of new technological advancements on overall employment, skills and wages. After a critical review of the extant literature and the available empirical studies, novel evidence is presented on the distribution of labor-saving automation (namely robotics and AI), based on natural language processing of US patents. This mapping shows that both upstream high-tech providers and downstream users of new technologies—such as Boeing and Amazon—lead the underlying innovative effort.
    Keywords: Innovation, Technological Change, Skills, Wages, Technological Unemployment
    JEL: O33
    Date: 2023–06
  17. By: Haylock, Michael (University of Tübingen); Kampkötter, Patrick (University of Tübingen); Kosfeld, Michael (Goethe University Frankfurt); von Siemens, Ferdinand (University of Amsterdam)
    Abstract: We offer a comprehensive analysis of the organizational and behavioral foundations of employees' helping and antisocial behavior as an integral part of a firm's workplace culture and working climate. Using representative employer-employee panel data of larger German private-sector firms, we document a large variation in helping and antisocial behavior across firms. Our regression results show that differences in supervisors' people skills, as well as workforce trust, social preferences, and personality traits explain these firm-level differences in helping and antisocial behavior in the workplace. Our measures are derived from established survey constructs and include preference items that have been behaviorally validated in experimental games by prior research. Together, the results corroborate the importance of both leadership quality and workforce composition for the manifestation of helpful and hostile workplace cultures.
    Keywords: helping, antisocial behavior, leadership, social preferences, trust, personality, human resource management practices
    JEL: D01 M14 M21 M50
    Date: 2023–05
  18. By: Joonas Ollonqvist (Finnish Institute for Health and Welfare); Kaisa Kotakorpi (Tampere University, Finnish Centre of Excellence in Tax Systems Research); Mikko Laaksonen (Finnish Centre for Pensions); Pekka Martikainen (University of Helsinki, Max Planck Institute for Demographic Research, and Max Planck â University of Helsinki Center for Social Inequalities in Population Health); Jukka Pirttilä (University of Helsinki, VATT Institute for Economic Research, and Finnish Centre of Excellence in Tax Systems Research); Lasse Tarkiainen (University of Helsinki)
    Abstract: We analyse the effects of changes in retirement incentives on retirement behaviour, utilising a Finnish pension reform implemented in 2005. The reform generated financial incentives to postpone retirement for some groups of individuals. Using detailed administrative data on individual health, we focus on whether individual reactions to incentives vary according to health status, and analyse whether individuals with poor health are also able to take advantage of the potential monetary benefits associated with the reform. We find that many types of individuals react to retirement incentives, and the reaction does not vary according to health status in a systematic way. Hence there does not seem to be a trade-off between providing incentives to postpone retirement and equal treatment of individuals with different health status.
    Keywords: Pension reform, retirement incentives, health
    JEL: H55 J26
    Date: 2023–05
  19. By: Azmat, Ghazala (Sciences Po, Paris); Kaufmann, Katja Maria (University of Bayreuth); Özdemir, Yasemin (University of Bayreuth)
    Abstract: We exploit a large quasi-exogenous shock to study the development of socioemotional skills during adolescence and the consequences for long-term behavior and labor market outlook. Using novel, longitudinal, microdata on cohorts of East German adolescents before and after a large macro shock (the German Reunification), we causally estimate the impact on socioemotional skills, finding substantial negative effects in the short run. These effects are substantially larger among those affected by the shock in their early adolescence (13-14 years old), relative to older adolescents (16-17 years old). Changes in socioemotional skills have a lasting (negative) impact on them as adults, especially among those affected early in their adolescence, in terms of their expressions of externalizing behavior (e.g., physical fighting) and behavioral control problems (i.e., substance abuse), as well as internalizing behavior (i.e., mental health) and in their (labor-market) optimism and expectations. This study highlights the permanent effects of uncertainty on socioemotional skills during formative years.
    Keywords: socioemotional development, youths, behavior, health, education
    JEL: D91 I12 I31 J13 J16 J24
    Date: 2023–05
  20. By: Hainmueller, Jens (Stanford University); Cascardi, Elisa (Stanford University); Hotard, Michael (Stanford University); Koslowski, Rey (University at Albany); Lawrence, Duncan (Stanford University); Yasenov, Vasil (Stanford University); Laitin, David D. (Stanford University)
    Abstract: Based on observational studies, conventional wisdom suggests that citizenship carries economic benefits. We leverage a randomized experiment from New York where low-income registrants who wanted to become citizens entered a lottery to receive fee vouchers to naturalize. Voucher recipients were about 36 p.p. more likely to naturalize. Yet, we find no discernible effects of access to citizenship on several economic outcomes, including income, credit scores, access to credit, financial distress, and employment. Leveraging a multi-dimensional immigrant integration index, we similarly find no measurable effects on non-economic integration. However, we do find that citizenship reduces fears of deportation. Explaining our divergence from past studies, our results also reveal evidence of positive selection into citizenship, suggesting that observational studies of citizenship are susceptible to selection bias.
    Keywords: citizenship, naturalization, immigrant integration
    JEL: G51 J15 J31
    Date: 2023–05

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