nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2023‒08‒28
23 papers chosen by
Joseph Marchand, University of Alberta

  1. Working from Home, Worker Sorting and Development By David Atkin; Antoinette Schoar; Sumit Shinde
  2. Competition and Career Advancement By Julian Johnsen; Hyejin Ku; Kjell G. Salvanes
  3. What Does Job Applicants' Body Art Signal to Employers? By Baert, Stijn; Herregods, Jolien; Sterkens, Philippe
  4. Are Managers More Machiavellian Than Other Employees? By Baktash, Mehrzad B.; Jirjahn, Uwe
  5. Why wages don't fall in jobs with incomplete contracts By Marco Fongoni; Daniel Schaefer; Carl Singleton
  6. The Effect of Franchise No-Poaching Restrictions on Worker Earnings By Callaci, Brian; Gibson, Matthew; Pinto, Sergio; Steinbaum, Marshall; Walsh, Matt
  7. Taxing the Gender Gap: Labor Market Effects of A Payroll Tax Cut for Women in Italy By Enrico Rubolino
  8. Why Is the Roy-Borjas Model Unable to Predict International Migrant Selection on Education? Evidence from Urban and Rural Mexico By Leopold, Stefan; Ruhose, Jens; Wiederhold, Simon
  9. The Wage Effect of Workplace Sexual Harassment: Evidence for Women in Europe By Giulia Zacchia; Izaskun Zuazu
  10. Debt Relief for the Financially Vulnerable: Impact on Employment, Welfare Receipt, and Mental Health By de Bruijn, Ernst-Jan; Vethaak, Heike; Koning, Pierre; Knoef, Marike
  11. The Impact of Money in Politics on Labor and Capital: Evidence from Citizens United v. FEC By Pat Akey; Tania Babina; Greg Buchak; Ana-Maria Tenekedjieva
  12. Impact of Transportation Network Companies on Labor Supply and Wages for Taxi Drivers By Lu Ling; Xinwu Qian; Satish V. Ukkusuri
  13. Effects of E-commerce on Local Labor Markets By Bauer, Anahid; Fernández Guerrico, Sofía
  14. Labor share decline across US manufacturing sub-sectors: 1979-2019 By Swayamsiddha Sarangi
  15. Innovation and the Enforceability of Noncompete Agreements By Matthew S. Johnson; Michael Lipsitz; Alison Pei
  16. Customer Discrimination and Ethnic Team Composition By Rinne, Ulf; Sonnabend, Hendrik; Wolters, Leonie
  17. More Unequal We Stand? Inequality Dynamics in the United States 1967–2021 By Jonathan Heathcote; Fabrizio Perri; Giovanni L. Violante; Lichen Zhang
  18. Spatial wage inequality in North America and Western Europe: Changes between and within local labour markets 1975-2019 By Bauluz, Luis; Bukowski, P.; Fransham, M.; Lee, A.; López Forero, M.; Novokmet, Filip; Breau, S.; Lee, Neil; Malgouyres, Clément; Schularick, Moritz; Verdugo, Gregory
  19. Intergenerational educational mobility and the COVID-19 pandemic By Anna Adamecz-Volgyi; Yuyan Jiang; Nikki Shure; Gill Wyness
  20. COVID-19 Wage Subsidy: Outcome evaluation - Value for Money By Caroline Fyfe; Dave Maré; Phoebe Taptiklis
  21. Energy Price Shocks, Conflict Inflation, and Income Distribution in a Three-sector Model By Rafael Wildauer; Karsten Kohler; Adam Aboobaker; Alexander Guschanski
  22. Why Personal Ties (Still) Matter: Referrals and Congestion By Mylius, F.
  23. Who's who: How uncertainty about the favored group effects outcomes of affirmative action By Trieu, Chi

  1. By: David Atkin; Antoinette Schoar; Sumit Shinde
    Abstract: A growing literature explores the impact of home-based versus office-based work. Differences in productivity may arise due to a treatment effect of the office or from workers with different abilities sorting into office or home work. We conduct an RCT in the data entry sector in India that exogenously allocates workers to the home or office. We find that the productivity of workers randomly assigned to working from home is 18% lower than those in the office. Two-thirds of the effect manifests itself from the first day of work with the remainder due to quicker learning by office workers over time. We find negative selection effects for office-based work: workers who prefer home-based work are 12% faster and more accurate at baseline. We also find a negative selection on treatment: workers who prefer home work are substantially less productive at home than at the office (27% less compared to 13% less for workers who prefer the office). These negative selection effects are partially explained by subgroups that likely face bigger constraints on selecting into office work, such as those with children or other home care responsibilities as well as poorer households.
    JEL: J01 J10 J22 J24 J46
    Date: 2023–07
  2. By: Julian Johnsen; Hyejin Ku; Kjell G. Salvanes
    Abstract: In standard promotion tournaments, contestants are ranked based on their output or productivity. We argue that workers’ career progression may also depend on their relative rankings in dimensions a priori unrelated to their job performance, such as visibility or in-person presence. Such implicit tournaments may rationalize a variety of seemingly counterproductive practices in the workplace, including long working hours, low uptake of statutory leave, and presenteeism. We illustrate the significance of implicit tournaments using the case of paternity leave among new fathers, where we exogenously vary a focal worker’s ranking within a contest, not via his own leave status but that of his competitors, exploiting a policy reform. We show that the focal worker is put on a better earnings trajectory than otherwise when a larger share of his competitors take leave because of the reform. The focal worker’s own absolute leave, however, has no direct effect on his earnings path as long as his own and his competitors’ leave statuses are symmetric. With effective coordination, it should thus be possible for all fathers to utilize paternity leave without incurring unwarranted career costs. This has implications for statutory leave policies, flexible work arrangements, and gender equality.
    Keywords: implicit tournaments, relative rank, promotion, parental leave, flexible work arrangements, gender differences
    JEL: M51 M52 J16 J22 J24 J31
    Date: 2023
  3. By: Baert, Stijn (Ghent University); Herregods, Jolien (Ghent University); Sterkens, Philippe (Ghent University)
    Abstract: In this study, we present a state-of-the-art scenario experiment which, for the first time in the literature, directly measures the stigma surrounding job candidates with tattoos and piercings using real recruiters. We find that job candidates with body art are perceived as less pleasant to work with, less honest, less emotionally stable, less agreeable, less conscientious and less manageable. This goes hand in hand with lower hireability for men with body art but not for women. Compared to candidates who reveal obesity, a characteristic we also randomise, those with body art score better overall in terms of hireability and rated personality, similar in terms of rated taste to collaborate but worse in terms of rated direct productivity drivers.
    Keywords: body art, obesity, stigma, personality, hiring, taste discrimination, statistical discrimination
    JEL: C91 J24 J71
    Date: 2023–07
  4. By: Baktash, Mehrzad B.; Jirjahn, Uwe
    Abstract: Concerns about corporate scandals and abusive leadership suggest that individuals with an opportunistic and manipulative personality take advantage of incomplete incentive and control systems to get their way into managerial positions. Against this background, we examine whether there is an association between Machiavellianism and occupying a managerial position. We suggest how to incorporate the psychological concept of Machiavellianism into agency theory and hypothesize that individuals scoring high on Machiavellianism are more likely to attain and keep a managerial position. Using a large and representative panel dataset from Germany, our empirical analysis confirms a strong and positive relationship between Machiavellianism and occupying a managerial position. This result holds in various robustness checks and in instrumental variable estimations accounting for possible endogeneity. Furthermore, our analysis provides evidence that the relationship is monotone; i.e., those with the highest scores of Machiavellianism are most likely to be managers. It also suggests that the direction of influence runs from Machiavellianism to occupational status and not vice versa.
    Keywords: Machiavellianism, Dark Triad, Managers, Agency Theory, Occupational Sorting
    JEL: D23 D90 J24 M12 M51
    Date: 2023
  5. By: Marco Fongoni (École d'Économie d'Aix-Marseille, Aix-Marseille Université); Daniel Schaefer (Institut für Volkswirtschaftslehre, Johannes-Kepler-Universität Linz); Carl Singleton (Department of Economics, University of Reading)
    Abstract: We investigate how the incompleteness of an employment contract - discretionary and non-contractible effort - can affect an employer's decision about cutting nominal wages. Using matched employer-employee payroll data from Great Britain, linked to a survey of managers, we find support for the main predictions of a stylised theoretical framework of wage determination: nominal cuts are at most half as likely when managers believe their employees have significant discretion over how they do their work, though involvement of employees in workplace decision-making reduces this correlation. We also describe how contract incompleteness and wage cuts tend to vary across different jobs. These findings provide the first quantitative evidence of the notion that managerial beliefs about contractual incompleteness can account for their hesitancy over nominal wage cuts. This has long been conjectured by economists, based on anecdotes, qualitative surveys, and lab experiments.
    Keywords: Wage rigidity, Employment contract, Workplace relations, Employer-employee data
    JEL: E24 E70 J31 J41
    Date: 2023–08–02
  6. By: Callaci, Brian (Open Markets Institute); Gibson, Matthew (Williams College); Pinto, Sergio (University of Maryland); Steinbaum, Marshall (University of Utah); Walsh, Matt (Burning Glass Technologies)
    Abstract: We evaluate the impact of the Washington State Attorney General's enforcement campaign against employee no-poaching clauses in franchising contracts, which unfolded from 2018 through early 2020. Implementing a staggered difference-in-differences research design using Burning Glass Technologies job vacancies and Glassdoor salary reports, we document the nationwide effect of the enforcement campaign on pay at franchising chains across numerous industries. Our preferred specification estimates a 6.6% increase in posted annual earnings from the job vacancy data and an approximate 4% increase in worker-reported earnings.
    Keywords: employer market power, franchising, antitrust, oligopsony
    JEL: J42 K21 L40 J31
    Date: 2023–07
  7. By: Enrico Rubolino (University of Lausanne, Department of Business and Economics)
    Abstract: This paper studies the labor market effects of a large payroll tax cut for female hires in Italy. Starting in January 2013, the payroll tax rate paid by the employer for female hires was reduced by 50 percent for a period of 12 months for temporary jobs and 18 months for permanent jobs. Eligibility for the tax cut depends on the time elapsed in nonemployment status and varies discontinuously by the worker’s municipality of residence, age, and occupation. Combining social security data on the universe of Italian private-sector workers with several empirical approaches, I find that the tax cut increases female employment and spurs business performance, especially where gender biases are more severe. By contrast, the tax cut does not raise workers’ net wages. A cost-benefit analysis implies that the net cost of the policy is around one-fourth of the budgetary cost. These findings provide the first empirical evidence that differentiating payroll taxes by gender helps to reduce the gender employment gap, but not the gender pay gap.
    Keywords: Local gender gaps; female employment; payroll tax; tax incidence
    JEL: H22 J21 J31
    Date: 2023–07
  8. By: Leopold, Stefan (University of Kiel); Ruhose, Jens (University of Kiel); Wiederhold, Simon (IWH Halle)
    Abstract: The Roy-Borjas model predicts that international migrants are less educated than nonmigrants because the returns to education are generally higher in developing (migrant-sending) than in developed (migrant-receiving) countries. However, empirical evidence often shows the opposite. Using the case of Mexico-U.S. migration, we show that this inconsistency between predictions and empirical evidence can be resolved when the human capital of migrants is assessed using a two-dimensional measure of occupational skills rather than by educational attainment. Thus, focusing on a single skill dimension when investigating migrant selection can lead to misleading conclusions about the underlying economic incentives and behavioral models of migration.
    Keywords: international migration, selection, occupational skills, education
    JEL: F22 O15 J61 J24
    Date: 2023–07
  9. By: Giulia Zacchia (Sapienza University of Rome); Izaskun Zuazu (Duisburg-Essen University)
    Abstract: This article contributes to the literature on wage discrimination by examining the consequences of sexual harassment in the workplace on wages for women in Europe. We model the empirical relationship between sexual harassment risk and wages for European women employees using individual-level data provided by the European Working Conditions Survey (EWCS, Eurostat). We find that sexual harassment risk has a negative and statistically significant effect on wages of -0.03% on average for women in Europe. However, our empirical analysis uncovers the importance of considering the dynamics of workplace power relations: analyzing individual-level data, we find evidence of a higher negative impact of sexual harassment risk on wages for women working in counter-stereotypical occupations. We conclude that the wage effect of hostile working conditions, mainly in terms of sexual harassment risk in the workplace, should be considered and monitored as a first critical step in making women be less vulnerable at work and increasing their bargaining power, thereby reducing inequalities in working conditions and pay in Europe.
    Keywords: Sexual harassment, wages, working conditions, Europe.
    JEL: J71 J31 J16 M52
    Date: 2023–05–08
  10. By: de Bruijn, Ernst-Jan (Leiden University); Vethaak, Heike (University of Leiden); Koning, Pierre (Vrije Universiteit Amsterdam); Knoef, Marike (Tilburg University)
    Abstract: We study the labor market and mental health impacts of debt relief among financially vulnerable individuals. We exploit a cutoff rule used by a Dutch welfare office to determine eligibility to debt relief of welfare debts. We use this cutoff as an instrument in both a fuzzy regression discontinuity and instrumented difference-in-difference design. With administrative data, we estimate economically small and insignificant effects of debt relief on employment, earnings, welfare receipt, and medication use for mental health problems. Subgroup analyses suggest that debt relief increases employment among debtors with larger welfare debts. The larger amount of debt relief for this group has probably a stronger potential to improve their overall debt position.
    Keywords: debt relief, welfare debts, welfare recipients, fuzzy regression discontinuity design, instrumented difference-in-difference
    JEL: G51 I38 J22 J64 J68
    Date: 2023–07
  11. By: Pat Akey; Tania Babina; Greg Buchak; Ana-Maria Tenekedjieva
    Abstract: We examine whether corporate money in politics benefits or hurts labor using the 2010 Supreme Court ruling Citizens United, which rendered bans on political election spending unconstitutional. In difference-in-difference analyses, affected states experience increases in both capital and labor income relative to unaffected states. We find evidence consistent with increased political spending spurring political competition and the adoption of pro-growth policies. These policies benefit a broader set of constituents as we find a broad-based increase in labor income. Affected states see increased political turnover and reduced regulatory burdens. The economic effects are stronger among ex-ante politically inactive and younger firms.
    JEL: D72 E25 G38 J30 P16
    Date: 2023–07
  12. By: Lu Ling; Xinwu Qian; Satish V. Ukkusuri
    Abstract: While the growth of TNCs took a substantial part of ridership and asset value away from the traditional taxi industry, existing taxi market policy regulations and planning models remain to be reexamined, which requires reliable estimates of the sensitivity of labor supply and income levels in the taxi industry. This study aims to investigate the impact of TNCs on the labor supply of the taxi industry, estimate wage elasticity, and understand the changes in taxi drivers' work preferences. We introduce the wage decomposition method to quantify the effects of TNC trips on taxi drivers' work hours over time, based on taxi and TNC trip record data from 2013 to 2018 in New York City. The data are analyzed to evaluate the changes in overall market performances and taxi drivers' work behavior through statistical analyses, and our results show that the increase in TNC trips not only decreases the income level of taxi drivers but also discourages their willingness to work. We find that 1% increase in TNC trips leads to 0.28% reduction in the monthly revenue of the yellow taxi industry and 0.68% decrease in the monthly revenue of the green taxi industry in recent years. More importantly, we report that the work behavior of taxi drivers shifts from the widely accepted neoclassical standard behavior to the reference-dependent preference (RDP) behavior, which signifies a persistent trend of loss in labor supply for the taxi market and hints at the collapse of taxi industry if the growth of TNCs continues. In addition, we observe that yellow and green taxi drivers present different work preferences over time. Consistently increasing RDP behavior is found among yellow taxi drivers. Green taxi drivers were initially revenue maximizers but later turned into income targeting strategy
    Date: 2023–07
  13. By: Bauer, Anahid (MINES ParisTech); Fernández Guerrico, Sofía (Université Libre de Bruxelles)
    Abstract: This paper studies the effect of e-commerce on local labor markets. We exploit cross-market variation in e-commerce price advantage stemming from the enactment of the Amazon Tax-state-level legislation that mandates state sales taxes collection to out-of-state online retailers. Introducing out-of-state sales taxes lowered employment and reduced wages in transportation and warehousing, industries complementary to e-commerce. Within the in-state retail sector, the decline in brick-and-mortar employment is somewhat offset by an increase in employment in warehouse clubs and supercenters. Our results are consistent with a general equilibrium model in which consumers substitute e-commerce for big-box purchases, crowding out brick-and-mortar retail.
    Keywords: e-commerce, retail, employment, Amazon Tax
    JEL: H71 J2 L81 O33
    Date: 2023–07
  14. By: Swayamsiddha Sarangi
    Abstract: This paper studies the sub-sectoral contributions to aggregate manufacturing labor share decline in the US between 1979 and 2019. Using the Log Mean Divisia index (LMDI) decomposition, the decline in the manufacturing sector’s labor share is decomposed into contributions from real wage growth, labor productivity growth, changes in employment shares, and relative prices arising from the constituent subsectors across three business cycles. The primary findings of the paper suggest that the downward decoupling of real wages from labor productivity is the primary contributor to the labor share decline in manufacturing. Moreover, low labor share sub-sectors (especially Chemical products, Food and Beverage and Tobacco products, and Petroleum and Coal products) have experienced an increase in their employment shares, contributing negatively to aggregate manufacturing labor share. Despite some similarities between manufacturing sub-sectors, this paper emphasizes the heterogeneity across sub-sectors to understand the possible mechanisms behind the decline of labor share.
    Keywords: laborshare, manufacturing, subsectors, Divisia decomposition JEL Classification: J30, J31, E24, L6
    Date: 2023
  15. By: Matthew S. Johnson; Michael Lipsitz; Alison Pei
    Abstract: Worker mobility across firms can enhance innovation by spreading knowledge, but such mobility may also hinder innovation by making firms reluctant to invest in R&D. A common way that firms limit workers' mobility is with noncompete agreements (NCAs). We examine how the legal enforceability of NCAs affects innovation, as measured by patenting, using data on every state-level NCA enforceability change between 1991–2014. We find that making NCAs easier to enforce (“stricter” enforceability) substantially reduces the rate of patenting: an average-sized increase in NCA enforceability leads a state to have 16-19% fewer citation-weighted patents over the following 10 years. This effect reflects a true loss in innovation rather than a reduction in useless or strategic patents. We then reconcile these findings with contrasting theoretical predictions. Stricter NCA enforceability reduces job mobility and new business formation in innovative industries, suggesting slower knowledge spread. Within publicly-traded firms, stricter NCA enforceability increases investment, but still leads to less innovation, suggesting that any gains from enhanced incentives to invest are more than offset by other ways that NCAs slow down innovation. Finally, using variation in technology classes’ exposure to NCA enforceability changes, we show that the economy-wide losses to innovation from strict enforceability are even larger than what our state-level estimates imply.
    JEL: J38 O31 O38
    Date: 2023–07
  16. By: Rinne, Ulf (IZA); Sonnabend, Hendrik (Fern Universität Hagen); Wolters, Leonie (Fern Universität Hagen)
    Abstract: This paper examines the relationship between customer preferences and ethnic team composition in German professional soccer. Ethnic team composition is measured using facial recognition techniques, player names, and nationality. The study uses a difference-in-differences approach to show that after New Year’s Eve 2015-16, third-division teams focusing on local and regional fans increased the share of native players by 6.4 to 12.2 percent compared to first- and second-division teams. Additionally, we find that in strongholds of the right-wing populist party AfD, a one-standard-deviation increase in the regional voting share for this party is associated with an increase in the share of native players by 3.1 to 3.6 percentage points. When examining the impacts of these changes in ethnic team composition on team productivity and economic success, we find that a higher share of (native) German is neither associated with better performance outcomes nor higher attendance rates.
    Keywords: discrimination, labor market, soccer, ethnicity, facial recognition
    JEL: J15 J44 J71 Z22
    Date: 2023–07
  17. By: Jonathan Heathcote; Fabrizio Perri; Giovanni L. Violante; Lichen Zhang
    Abstract: Heathcote et al. (2010) conducted an empirical analysis of several dimensions of inequality in the United States over the years 1967-2006, using publicly-available survey data. This paper expands the analysis, and extends it to 2021. We find that since the early 2000s, the college wage premium has stopped growing, and the race wage gap has stalled. However, the gender wage gap has kept shrinking. Both individual- and household-level income inequality have continued to rise at the top, while the cyclical component of inequality dominates dynamics below the median. Inequality in consumption expenditures has remained remarkably stable over time. Income pooling within the family and redistribution by the government have enormous impacts on the dynamics of household-level inequality, with the role of the family diminishing and that of the government growing over time. In particular, largely due to generous government transfers, the COVID recession has been the first downturn in fifty years in which inequality in disposable income and consumption actually declined.
    JEL: D12 D31 E21 H53 J31
    Date: 2023–07
  18. By: Bauluz, Luis; Bukowski, P.; Fransham, M.; Lee, A.; López Forero, M.; Novokmet, Filip; Breau, S.; Lee, Neil; Malgouyres, Clément; Schularick, Moritz; Verdugo, Gregory
    Abstract: The rise of economic inequalities in advanced economies has been often linked with the growth of spatial inequalities within countries, yet there is limited comparative research that studies the relationship between national and subnational economic inequality. This paper presents the first systematic attempt to create internationally comparable evidence showing how different countries perform in terms of geographic wage inequalities. We create cross-country comparable measures of spatial wage disparities between and within similarly-defined local labour market areas (LLMAs) for Canada, France, (West) Germany, the UK and the US since the 1970s, and assess their contribution to national inequality. By the end of the 2010s, spatial inequalities in LLMA mean wages are similar in Canada, France, Germany and the UK; the US exhibits the highest degree of spatial inequality. Over the study period, spatial inequalities have nearly doubled in all countries, except for France where spatial inequalities have fallen back to 1970s levels. Due to a concomitant increase in within-place inequality, the contribution of places in explaining national wage inequality has remained fairly constant over the 40-year study period, except in the UK where we document a significant increase. Whilst common global social, economic and technological shocks are important drivers of spatial inequality, this variation in levels and trends of spatial inequality opens the way to comparative research exploring the role of national institutions in mediating how global shocks translate into economic disparities between places.
    Keywords: regional inequality, wage inequality, local labour markets
    JEL: J3 R1 R23
    Date: 2023
  19. By: Anna Adamecz-Volgyi (UCL Social Research Institute, University College London); Yuyan Jiang (UCL Social Research Institute, University College London); Nikki Shure (UCL Social Research Institute, University College London); Gill Wyness (UCL Centre for Education Policy and Equalising Opportunities, University College London)
    Abstract: We examine the differential impact of the COVID-19 pandemic on the labour market outcomes of graduate workers by their family background. Specifically, we compare first in family (FiF) graduates, young people who obtained a university degree even though their parents did not, with their graduate peers whose parents have university degrees. We compare their labour market outcomes using multiple waves of data collected during the pandemic, which are linked to an existing longitudinal study and administrative data. We find that FiF graduates, both men and women, were just as likely to keep working during the pandemic as the graduate children of graduate parents. Our results, however, reveal substantial differences in the outcomes of graduates who stopped working, and these differences are heterogenous by gender. Female FiF graduates were more likely to stop working altogether or to be put on an unpaid leave and less likely to be put on furlough or paid leave than non-FiF female graduates. However, we find no such differences between FiF and non-FiF male graduates. Our results highlight how the COVID-19 recession has exacerbated the disadvantage arising from the intersectionality of socioeconomic background and gender and the prolonged impact of parental human capital for women.
    Keywords: socioeconomic gaps, intergenerational educational mobility, higher education, first generation, first in family, COVID-19
    JEL: I24 J24
    Date: 2023–08
  20. By: Caroline Fyfe (Motu Economic and Public Policy Research); Dave Maré (Motu Economic and Public Policy Research); Phoebe Taptiklis (Motu Economic and Public Policy Research)
    Abstract: The value for money of the COVID-19 Wage Subsidy Support programme (WSS) was evaluated using cost-benefit analysis from a societal perspective, that encompassed the New Zealand economy as a whole. The subsidy was treated as a transfer (from the government into the wider NZ economy) and negative transfers - government money repaid or not spent, i.e.– subsidy repayments and unemployment support avoided - were subtracted from this. As the analysis was undertaken from a societal perspective, transfers were included as both a cost and a benefit, but with a 20% deadweight burden of raising tax revenue added to the cost side. The cost of administering the wage subsidy was also included. The quantified benefits of the wage subsidy were increased output associated with people remaining in employment, and the value of the wellbeing they experienced from avoiding unemployment. Outcomes were calculated by employment months gained over the short (6 month) and medium (12 month) term. The March 2020 wave had a favourable benefit-to-cost ratio of 1.20 after 6 months and 1.45 after 12 months. The 12-month ratio was 1.14 for the Extension wave, 0.83 for the Resurgence wave, and 1.63 for the March 2021 wave. Overall the COVID-19 wage subsidy represented value for money. It allowed more workers to remain in employment and more sole traders to remain in business, than was predicted would occur without a wage subsidy. To understand whether the effectiveness of the wage subsidy as an intervention remained stable over time, it is recommended that an evaluation be undertaken on the August 2021 wage subsidy. The value for money analysis could only identify direct benefits of the wage subsidy and so was limited to examining microeconomic outcomes. An investigation of fiscal interventions to mitigate the impact of the COVID-19 pandemic on the New Zealand economy is recommended to determine their effectiveness at a macroeconomic level.
    Keywords: COVID-19, Wage subsidy, value for money, employment retention, sole trader survival, cost benefit analysis
    JEL: J08 J20
    Date: 2023–08
  21. By: Rafael Wildauer; Karsten Kohler; Adam Aboobaker; Alexander Guschanski
    Abstract: The paper presents a model of conflict inflation to investigate the distributional effects of energy price shocks. We argue that periods of high inflation are always periods of significant redistribution of income. We analyse how such redistribution occurs along two dimensions: between workers and firms and between sectors of the economy. To study the distributional outcomes of the recent inflationary episode, we build a three-sector model comprising a domestic energy sector which provides inputs for a goods and a services sector. The model is calibrated to US sectoral data with the Method of Simulated Moments. While energy prices are set internationally, non-energy prices and nominal wages are set by firms and workers, giving rise to conflicting claims over the distribution of income. We consider three shocks that trigger inflationary distributional conflict: an energy price shock combined with demand and supply shocks to the goods sector. We find that the recent inflationary episode constitutes a price-wage rather than a wage-price spiral. The combined shocks induce non-energy firms to raise prices, which undermines real wages, and redistributes income towards firms. The sectoral demand shift towards goods in combination with pandemic-related supply bottlenecks further raises mark-ups, accelerating inflation and leading to divergence in sectoral profit margins. We compare three anti-inflationary policies: redistributing windfall profits to workers, nominal wage restraint, and aggregate demand contraction through monetary or fiscal policy. The redistribution of profits via a windfall tax is most effective in reducing inflation without reinforcing reductions in employment and labour shares.
    Keywords: energy price shocks, inflation, income distribution, multi-sector model, wageprice spiral, price-wage spiral
    JEL: E24 E31 J30
    Date: 2023–08
  22. By: Mylius, F.
    Abstract: The internet has reduced search costs significantly, making it much easier to apply for a large number of jobs. In spite of that, the share of jobs found through personal contacts has remained stable over the past decades. My theoretical framework explores a new channel that makes referred candidates favorable for firms: a higher likelihood to accept a job offer. This trait becomes particularly advantageous whenever firms face large uncertainty over whether their candidates would accept their job offer. As we see, if search barriers vanish and workers apply to more firms, a referred candidate expects to face more competitors. On the other hand, with more applications being sent out, workers are, on average, less interested in each firm they apply to, which makes referred candidates stand out more. This means the chances of getting a job offer through a referral can increase if competing workers send out more applications.
    Keywords: Matching theory, networks, winner’s curse, informal labor market
    JEL: C78 D83 D85 J46
    Date: 2023–08–07
  23. By: Trieu, Chi
    Abstract: When affirmative action policies target more than one disadvantaged group, they contain uncertainty as to whether an individual who belongs to one of these groups was actually favored. In a laboratory experiment, we study how this feature affects outcomes of affirmative action in the form of quotas, and compare it with two other conditions, namely affirmative action with a certain favored group and no affirmative action. We find that when a group is favored with certainty and the social identity that triggers affirmative action is made salient, affirmed individuals are wrongly perceived as less competent, both by themselves and by others. Consequently, their willingness to compete does not increase and they are selected less for teamwork post competition. Affirmative action with uncertain favored groups does not distort belief in competence, and thus does not induce such unintended consequences. In contrast, it increases competition entry of the affirmed groups and enhances their chances of being selected for teamwork.
    Keywords: Affirmative action, Competition, Uncertainty, Identity, Experiment
    JEL: C91 D02 J71
    Date: 2023

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