nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2023‒07‒24
twenty papers chosen by
Joseph Marchand
University of Alberta

  1. Labor Supply Effects of a Universal Cash Transfer By Gromadzki, Jan
  2. New Technologies and Jobs in Europe By Stefania Albanesi; António Dias da Silva; Juan F. Jimeno; Ana Lamo; Alena Wabitsch
  3. Intuit QuickBooks Small Business Index: A New Employment Series for the US, Canada, and the UK By Ufuk Akcigit; Raman Singh Chhina; Seyit M. Cilasun; Javier Miranda; Eren Ocakverdi; Nicolas Serrano-Velarde
  4. "Labor Market Monopsony and Firm Behavior: Evidence from Spanish Exporters". By Akin A. Cilekoglu
  5. The Anatomy of Competitiveness By Buser, Thomas; Oosterbeek, Hessel
  6. Why Do Wages Grow Faster for Educated Workers? By David J. Deming
  7. The Spillover Effects of Top Income Inequality By Joshua D. Gottlieb; David Hémous; Jeffrey Hicks; Morten G. Olsen
  8. The Impact of Pension Reform on Employment, Retirement and Disability Insurance Claims By Hernaes, Erik; Markussen, Simen; Piggott, John; Røed, Knut
  9. Gender and Career Progression in Academia: European Evidence By Morettini, Lucio; Tani, Massimiliano
  10. Variable Payment Schemes and Productivity: Do Individual-Based Schemes Really Have a Stronger Influence than Collective Ones? By Jirjahn, Uwe; Mohrenweiser, Jens
  11. Does the Tendency for 'Quiet Quitting' Differ across Generations? Evidence from the UK By Hamilton, Odessa S.; Jolles, Daniel; Lordan, Grace
  12. Closing the Gender Gap in Salary Increases: Evidence from a Field Experiment on Promoting Pay Equity By Jakob Alfitian; Marvin Deversi; Dirk Sliwka
  13. The Effectiveness of Interventions to Increase Employment in Education and Healthcare: A Systematic Literature Review By Fleck, Lara; Somers, Melline; Stolp, Tom; Groot, Wim; van Merode, Frits; de Vries, Ralph
  14. China's 40 Years Demographic Dividend and Labor Supply: The Quantity Myth By Meng, Xin
  15. The Historical Impact of Coal on Cities By Clay, Karen; Lewis, Joshua; Severnini, Edson R.
  16. Gender differences in re-contesting decisions: New evidence from French municipal elections By Peveri, Julieta; Sangnier, Marc
  17. Unpacking Name-Based Race Discrimination By Abel, Martin; Burger, Rulof
  18. Regional diversification and labour market upgrading: Local access to skill-related high-income jobs helps workers escaping low-wage employment By Zoltán Elekes; Rikard Eriksson; Anna Baranowska-Rataj
  19. Skill-Biased Imports, Skill Acquisition, and Migration By Fan, Jingting; Li, Lei
  20. Dynamic Causal Forests, with an Application to Payroll Tax Incidence in Norway By Evelina Gavrilova; Audun Langørgen; Floris T. Zoutman; Floris Zoutman

  1. By: Gromadzki, Jan (Warsaw School of Economics)
    Abstract: I investigate the labor supply effects of the introduction of a large unconditional cash benefit. I exploit the unique design of the child benefit program in Poland to identify the income effects of the monthly transfer in a difference-in-differences design. On average, the marginal propensity to earn out of unearned income was equal to -0.14. For every extra 100 dollars in monthly child benefit transfers households receive, they spend 43 dollars on consumption and save 43 dollars. Additional evidence shows that the program had a positive impact on investments in human capital and home production efficiency.
    Keywords: unconditional cash transfer, income effects, labor supply, child benefit, poverty, difference-in-differences
    JEL: I38 J21 J22
    Date: 2023–05
  2. By: Stefania Albanesi; António Dias da Silva; Juan F. Jimeno; Ana Lamo; Alena Wabitsch
    Abstract: We examine the link between labour market developments and new technologies such as artificial intelligence (AI) and software in 16 European countries over the period 2011- 2019. Using data for occupations at the 3-digit level in Europe, we find that on average employment shares have increased in occupations more exposed to AI. This is particularly the case for occupations with a relatively higher proportion of younger and skilled workers. This evidence is in line with the Skill Biased Technological Change theory. While there exists heterogeneity across countries, only very few countries show a decline in employment shares of occupations more exposed to AI-enabled automation. Country heterogeneity for this result seems to be linked to the pace of technology diffusion and education, but also to the level of product market regulation (competition) and employment protection laws. In contrast to the findings for employment, we find little evidence for a relationship between wages and potential exposures to new technologies.
    JEL: E24 J2 J21 J31 O30 O33
    Date: 2023–06
  3. By: Ufuk Akcigit; Raman Singh Chhina; Seyit M. Cilasun; Javier Miranda; Eren Ocakverdi; Nicolas Serrano-Velarde
    Abstract: Small and young businesses are essential for job creation, innovation, and economic growth. Even most of the superstar firms start their business life small and then grow over time. Small firms have less internal resources, which makes them more fragile and sensitive to macroeconomic conditions. This suggests the need for frequent and real-time monitoring of the small business sector’s health. Previously this was difficult due to a lack of appropriate data. This paper fills this important gap by developing a new Intuit QuickBooks Small Business Index that focuses on the smallest of small businesses with at most 9 workers in the US and the UK and at most 19 workers in Canada. The Index aggregates a sample of anonymous QuickBooks Online Payroll subscriber data (QBO Payroll sample) from 333, 000 businesses in the US, 66, 000 in Canada, and 25, 000 in the UK. After comparing the QBO Payroll sample data to the official statistics, we remove the seasonal components and use a Flexible Least Squares method to calibrate the QBO Payroll sample data against official statistics. Finally, we use the estimated model and the QBO Payroll sample data to generate a near real-time index of economic activity. We show that the estimated model performs well both in-sample and out-of-sample. Additionally, we use this analysis for different regions and industries.
    JEL: D22 E24 J20 J21 J24
    Date: 2023–06
  4. By: Akin A. Cilekoglu (AQR-IREA Research Group, University of Barcelona, Spain.)
    Abstract: In this paper, I develop a method to estimate the effect of firm behavior on labor market monopsony power. Using China’s accession to WTO for the identification, I employ the proposed empirical framework to analyse the impact of Spanish firms’ exports on their labor market monopsony power. The findings suggest that higher exports raised monopsony power of firms in labor markets between 1996 and 2007. After 2001, more intensely exporting firms reduced their wages by 36-45 percentage points and paid their employees around 39-49 percent of their marginal revenue product. Aligned with increased monopsony power, exporting firms experienced a decline labor productivity and labor share while they employed more low-skilled workers and temporary contracts.
    Keywords: Labor market monopsony, Firm behavior, Exports, Trade. JEL classification: J42, D22, F16, F14, J21.
    Date: 2023–07
  5. By: Buser, Thomas (University of Amsterdam); Oosterbeek, Hessel (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
    Date: 2023–06
  6. By: David J. Deming
    Abstract: The U.S. college wage premium doubles over the life cycle, from 27 percent at age 25 to 60 percent at age 55. Using a panel survey of workers followed through age 60, I show that growth in the college wage premium is primarily explained by occupational sorting. Shortly after graduating, workers with college degrees shift into professional, nonroutine occupations with much greater returns to tenure. Nearly 90 percent of life cycle wage growth occurs within rather than between jobs. To understand these patterns, I develop a model of human capital investment where workers differ in learning ability and jobs vary in complexity. Faster learners complete more education and sort into complex jobs with greater returns to investment. College acts as a gateway to professional occupations, which offer more opportunity for wage growth through on-the-job learning.
    JEL: J24
    Date: 2023–06
  7. By: Joshua D. Gottlieb; David Hémous; Jeffrey Hicks; Morten G. Olsen
    Abstract: Top income inequality in the United States has increased considerably within occupations. This phenomenon has led to a search for a common explanation. We instead develop a theory where increases in income inequality originating within a few occupations can "spill over" through consumption into others. We show theoretically that such spillovers occur when an occupation provides non-divisible services to consumers, with physicians our prime example. Examining local income inequality across U.S. regions, the data suggest that such spillovers exist for physicians, dentists, and real estate agents. Estimated spillovers for other occupations are consistent with the predictions of our theory.
    JEL: D31 J24 J31 O15
    Date: 2023–06
  8. By: Hernaes, Erik (Ragnar Frisch Centre for Economic Research); Markussen, Simen (Ragnar Frisch Centre for Economic Research); Piggott, John (University of New South Wales); Røed, Knut (Ragnar Frisch Centre for Economic Research)
    Abstract: We evaluate a comprehensive reform of Norwegian early retirement institutions in 2011 through the lens of a parsimonious random utility choice model. The reform radically changed work incentives and/or pension access-age for some (but not all) workers. We find that improved work incentives caused employment to rise considerably, at the expense of both early retirement and exits through disability insurance. Lower access-age to own pension funds caused a small increase in employment and a large drop in disability program participation. Properly designed pension reforms thus need to take the interplay between old age pension and disability insurance programs into account.
    Keywords: pension reform, disability insurance, program substitution
    JEL: H55 J22
    Date: 2023–06
  9. By: Morettini, Lucio (National Research Council, Italy); Tani, Massimiliano (University of New South Wales)
    Abstract: We study career trajectories of university researchers in Europe, with a particular emphasis on the speed of career progression by gender. Using the panel data collected by the MORE project (Mobility Survey of the Higher Education Sector) - a longitudinal database that gathers survey responses from over 10, 000 university researchers across Europe - we find that women have a lower probability of promotion, but conditional on a career advance, their career development proceeds at a faster pace than that of comparable male researchers. Faster progression among women is positively influenced by the share of female researchers in the academic environment. Higher salaries in sectors outside academia appear to reinforce the positive selection of women preferring to stay in academia.
    Keywords: academic careers, career progression, promotion
    JEL: J20 J24 J62
    Date: 2023–06
  10. By: Jirjahn, Uwe (University of Trier); Mohrenweiser, Jens (Bournemouth University)
    Abstract: While studies on individual-based and collective payment schemes are largely unconnected, there appears to be a widely held belief that individual-based schemes have a stronger influence on firm performance than collective ones. This also applies to an index of best management practices developed by Bloom and Van Reenen (2007). The index assigns the highest weight to individual-based performance pay, a medium weight to group-based performance pay and a low weight to profit sharing. This weighting is obviously driven by the implicit assumption that collective payment schemes suffer from a free-rider problem so they have a less strong influence on productivity than individual-based schemes. We show that this assumption is questionable from both a theoretical and an empirical point of view. Using the German Management and Organizational Practices Survey, one of the datasets initiated by Bloom and Van Reenen, we show that individual-based performance pay does not outperform group-based performance pay or profit sharing. The finding also holds when accounting for possible interactions among the payment schemes and considering the moderating roles of firm size, employee representation, and innovativeness. Our results suggest that researchers should be careful with respect to the assumptions and subjective priors guiding their empirical analyses.
    Keywords: management practices, free-rider problem, individual performance pay, group performance pay, profit sharing
    JEL: J33 M52 M50
    Date: 2023–06
  11. By: Hamilton, Odessa S. (London School of Economics); Jolles, Daniel (London School of Economics); Lordan, Grace (London School of Economics)
    Abstract: The post-COVID-19 phenomenon of 'quiet quitting' could be problematic for UK economic growth because unpaid overtime has been a key contributor to business productivity since the 2008 global financial crisis. Here, we explore the extent to which this phenomenon exists in the UK, and whether the tendency for 'quiet quitting' differs across generations. We analysed data from the UK Quarterly Labour Force Survey (QLFS) between 2007-2022 to determine changes in hours worked. Quiet quitting was characterised by notable declines in hours worked between 2019-2022, benchmarked against 2007-2018 trajectories. Analyses were demarcated by four commonly defined generational cohorts (i.e., Generation Z [GenZs; 1997-2004], Generation Y [Millennials; 1981-1996], Generation X [GenXers; 1965-1980], and Baby Boomers [1952-1964]). Overall, we found that the UK workforce reduced hours by ~28 hours per year post-pandemic. Hours lost was most notable in 2022, with hours down by ~36 hours. However, in assessing generational differences, quiet quitting was most pronounced in the two younger cohorts. GenZs showed the steepest decline in hours worked, while Millennials worked the least number of hours overall, with no indication of recovery by the end of the study period. Hours declined for GenXers and Baby Boomers, but changes were more moderate, and Baby Boomers showed evidence of a possible rebound to pre-pandemic levels. Given the ~24, 568 million UK full-time workers in 2022, our findings equate to over 55 million discretionary hours lost to the labour market per year between 2019-2022, 48.1% of which is accounted for by Millennials. Thus, we evidence that quiet quitting has interrupted the recovery of working hours in the UK to prepandemic levels, and lost hours are especially attributable to younger cohorts.
    Keywords: quiet quitting, generations
    JEL: J24 J01
    Date: 2023–06
  12. By: Jakob Alfitian (University of Cologne, Faculty of Management, Economics, and Social Sciences. Albertus Magnus Platz, D-50923 Köln, Germany); Marvin Deversi (Education Y); Dirk Sliwka (University of Cologne, CESifo and IZA, Faculty of Management, Economics, and Social Sciences, Albertus Magnus Platz, D-50923 Köln, Germany)
    Abstract: We present a natural field experiment on promoting pay equity through simple modifications to the salary review process involving 623 middle managers and 8, 951 subordinate employees of a large technology firm.We first document a gender gap not only in salary levels but also in salary increases. Our treatments provide for a gender-neutral reallocation of the salary increase budget available to middle managers aimed at promoting pay equity, along with different variants of a corresponding decision guidance. We show that the budget reallocation combined with an explicit decision guidance, while still leaving managers discretion in allocating the budget, can completely eliminate the gender gap in salary increases. The treatments also do not appear to undermine desired performance differentiation in salary increases. We thus show that simple modifications to the salary review process can go a long way toward achieving pay equity, preventing the widening of gender gaps throughout the career.
    Keywords: Randomized Controlled Trial, Pay equity, Gender pay gap, Salary structure
    JEL: J31 J71 M52
    Date: 2023–07
  13. By: Fleck, Lara (RS: GSBE other - not theme-related research, ROA / Health, skills and inequality); Somers, Melline (RS: GSBE other - not theme-related research, ROA / Health, skills and inequality); Stolp, Tom (RS: GSBE other - not theme-related research, ROA / Education and transition to work); Groot, Wim (RS: GSBE MGSoG, Maastricht Graduate School of Governance, RS: CAPHRI - R2 - Creating Value-Based Health Care, Health Services Research); van Merode, Frits (Faculteit FHML Centraal, RS: CAPHRI - R2 - Creating Value-Based Health Care); de Vries, Ralph
    Abstract: Both the healthcare and education sector suffer from considerable staff shortages. In the healthcare sector, shortages are particularly prominent for nurses, while the education sector experiences significant teacher shortages. In this systematic literatur e review, we examine the effectiveness of interventions and policies to reduce staff shortages in healthcare and education in high income countries. We focus our analysis on studies that apply research designs that allow for causal inference to inform poli cymakers about the effectiveness of interventions. In total, we include 85 studies that meet our inclusion criteria. Out of these studies, 71 studies focus on teachers and 1 4 on nurses. Interestingly, 72 of the retrieved studies were conducted in the US. T he majority of studies examine the impact of financial incentives and a large share of these studies report positive effects on teacher employment. Moreover, different types of interventions that invest in workers’ human capital show predominantly positive effect s on employment. Interventions that equip nurses with skills to better cope with the stressors of their profession seem to be particularly effective. The same holds for policies that increase the scope of practice for nurses. Finally, effective scho ol leaders show to be better capable of retaining (high quality) teachers.
    JEL: I10 I20 J22
    Date: 2023–06–22
  14. By: Meng, Xin (Australian National University)
    Abstract: In the past forty years the Chinese economy achieved miracle growth and many attributed a significant part of this to China's favourable labour supply flowing from the "demographic dividend": a larger share of working age population (WAPS). Currently, this dividend is slipping away and many in China are very concerned. Against this background I set out to examine the contributions of various dimensions of China's changing WAPS and its impact on economic growth. I show that between 1982-2015 the increase in the WAPS was offset by a decline in the labour force participation rate, resulting in a very limited increase in the quantity of labour supply. I then estimate the association between regional variations in economic growth and changes in factors such as population size, WAPS, migration, education. The results lend little support to the view that increasing WAPS played a major role in China's economic growth over this period.
    Keywords: labor supply, demographic dividends, China
    JEL: J10 J11 J21
    Date: 2023–06
  15. By: Clay, Karen (Carnegie Mellon University); Lewis, Joshua (University of Montreal); Severnini, Edson R. (Carnegie Mellon University)
    Abstract: Historically coal has offered both benefits and costs to urban areas. Benefits include coal's role in fueling industry and thus employment. The primary costs are air pollution and its impact on human health. This paper starts by using a Rosen-Roback style model to examine how differences in local coal availability affect equilibrium city employment. Drawing on the model, the paper surveys papers that examine the net effects of coal on the growth in city population and air pollution on health. The paper then turns to papers that explicitly consider the trade-offs between production benefits and pollution disamenities across space and over time. The paper ends with a discussion of opportunities for future work on coal and cities in historical settings.
    Keywords: coal availability, local development, air pollution, trade-offs of coal consumption
    JEL: N52 N72 O13 Q53 Q56
    Date: 2023–06
  16. By: Peveri, Julieta; Sangnier, Marc
    Abstract: This paper studies differences across genders in the re-contesting decisions of politicians following electoral wins or defeats. Using close races in mixed-gender French local elections, we show that women are less likely to persist in competition when they lose compared to male runners-up, but are equally or more prone than male winners to re-contest when they win. Differences in observable characteristics or in the expected electoral returns of running again cannot fully account for these gender gaps in persistence. In contrast, evidence suggests that results are driven by behavioural explanations such as cross-gender differences in candidates' attitudes toward competition, or by political parties behaving differently toward female and male candidates for a given electoral outcome. Additionally, we provide evidence that a woman's victory encourages former female challengers to re-contest but does not trigger the entry of new female candidates.
    Keywords: Gender, Competition, Persistence, Candidates, Self-selection, Elections
    JEL: D72 J16 J24
    Date: 2023–06
  17. By: Abel, Martin (Bowdoin College); Burger, Rulof (Stellenbosch University)
    Abstract: We investigate the extent and underlying mechanisms of how race beliefs associated with applicants' names affect hiring decisions. Using nationally representative data, we find widespread beliefs that people with names perceived to be Black possess lower levels of education, productivity and noncognitive skills. Notably, this race penalty persists when considering only variation in race perception for the same name and when omitting distinctly Black names. Conducting an incentivized hiring experiment with real worker data, we find that participants are 30 percentage points (pp) more likely to hire workers perceived to be white compared to Black. Controlling for productivity and noncognitive skills beliefs reduces this racial gap to 21 pp and 20 pp, respectively. Results indicate that race serves as a decision heuristic as employers make faster decisions and display more certainty when perceived race differences between candidates are large. Moreover, the race gap in hiring increases by 25% when employers are forced to make quick decisions. Estimates from a structural drift-diffusion model quantify the effect of beliefs and show that employers differ both in their usage of racial heuristics and inclination to override these heuristics when given sufficient decision time.
    Keywords: race discrimination, hiring discrimination, name associations
    JEL: J50 J70
    Date: 2023–06
  18. By: Zoltán Elekes (Centre for Economic and Regional Studies, Umeå University); Rikard Eriksson (Umeå University); Anna Baranowska-Rataj (Umeå University)
    Abstract: This paper investigates how the evolution of local labour market structure enables or constrains workers as regards escaping low-wage jobs. Drawing on the network-based approach of evolutionary economic geography, we employ a detailed individual-level panel dataset to construct skill-relatedness networks for 72 functional labour market regions in Sweden. Subsequent fixed-effect panel regressions indicate that increasing density of skill-related high-income jobs within a region is conducive to low-wage workers moving to better-paid jobs, hence facilitating labour market upgrading through diversification. While metropolitan regions offer a premium for this relationship, it also holds for smaller regions, and across various worker characteristics.
    Keywords: skill-relatedness network; local labour market; low-wage workers; diversification and structural change; relatedness density
    JEL: J21 J31 R11 R23
    Date: 2023–06
  19. By: Fan, Jingting (Pennsylvania State University); Li, Lei (University of Mannheim)
    Abstract: Imported capital goods, which embody skill-complementary technologies, can increase the supply of skills in developing countries. Focusing on China and using a shift-share design, we show that city-level capital goods import growth increases the local skill share and that both skill acquisition and migration play a role. We develop and quantify a spatial equilibrium model with these two mechanisms to examine the aggregate effects of capital goods imports, accounting for trade and migration linkages between cities. Counterfactual experiments suggest that the growth in capital goods imports in China between 2000 and 2010 led to a 3.7-8.9 million increase in the stock of college graduates, representing 5.7-13% of the total increase over this period. However, this growth disproportionately favored coastal regions, exacerbating existing spatial disparities.
    Keywords: imported capital goods, capital-skill complementarity, skill acquisition, migration
    JEL: F14 F16 F66 J24 J61
    Date: 2023–06
  20. By: Evelina Gavrilova; Audun Langørgen; Floris T. Zoutman; Floris Zoutman
    Abstract: This paper develops a machine-learning method that allows researchers to estimate heterogeneous treatment effects with panel data in a setting with many covariates. Our method, which we name the dynamic causal forest (DCF) method, extends the causal-forest method of Wager and Athey (2018) by allowing for the estimation of dynamic treatment effects in a difference-in-difference setting. Regular causal forests require conditional independence to consistently estimate heterogeneous treatment effects. In contrast, DCFs provide a consistent estimate for heterogeneous treatment effects under the weaker assumption of parallel trends. DCFs can be used to create event-study plots which aid in the inspection of pre-trends and treatment effect dynamics. We provide an empirical application, where DCFs are applied to estimate the incidence of payroll tax on wages paid to employees. We consider treatment effect heterogeneity associated with personal- and firm-level variables. We find that on average the incidence of the tax is shifted onto workers through incidental payments, rather than contracted wages. Heterogeneity is mainly explained by firm-and workforce-level variables. Firms with a large and heterogeneous workforce are most effective in passing on the incidence of the tax to workers.
    Keywords: causal forest, treatment effect heterogeneity, payroll tax incidence, administrative data
    JEL: C18 H22 J31 M54
    Date: 2023

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