nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2023‒09‒04
seventeen papers chosen by
Joseph Marchand, University of Alberta

  1. Robots and Wages: A Meta-Analysis By Jurkat, Anne; Klump, Rainer; Schneider, Florian
  2. Effects of Lottery Wins on Household Labor Supply By Belloc, Ignacio; Molina, José Alberto; Velilla, Jorge
  3. Women in Management and the Gender Pay Gap By Sondergeld, Virginia; Wrohlich, Katharina
  4. Lifting labour supply to tackle tightness in the Netherlands By Nicolas Gonne
  5. Tightening access to early retirement: who can adapt? By Bernhard Boockmann; Martin Kroczek; Natalie Laub
  6. Remote Work and City Structure By Ferdinando Monte; Charly Porcher; Esteban Rossi-Hansberg
  7. Non-monetary interventions, workforce retention and hospital quality: evidence from the English NHS By Moscelli, G.;; Sayli, M.;; Blanden, J.;; Mello, M.;; Castro-Pires, H.;; Bojke, C.;
  8. Spatial wage inequality in North America and Western Europe: changes between and within local labour markets 1975-2019 By Bauluz, Luis; Bukowski, Pawel; Fransham, Mark; Lee, Annie; López Forero, Margarita; Novokmet, Filip; Breau, Sébastien; Lee, Neil; Malgouyres, Clement; Schularick, Moritz; Verdugo, Gregory
  9. The Cost of Regulatory Compliance in the United States By Francesco Trebbi; Miao Ben Zhang; Michael Simkovic
  10. Natural Resources, Demand for Skills, and Schooling Choices By Aline Bütikofer; Antonio Dalla-Zuanna; Kjell Salvanes
  11. Regional employment effects of the Hartz-reforms By Hörnig, Lukas
  12. Digitalisation in European regions: Unravelling the impact of relatedness and complexity on digital technology adoption and productivity growth By Stefan Apostol; Eduardo Hernández-Rodríguez
  13. "Generate" the Future of Work through AI: Empirical Evidence from Online Labor Markets By Jin Liu; Xingchen Xu; Yongjun Li; Yong Tan
  14. How much do firms need to satisfy employees? - Evidence from credit spreads and online employee reviews By Koji Takahashi; Sumiko Takaoka
  15. The Economics of Financial Stress By Sergeyev, Dmitriy; Lian, Chen; Gorodnichenko, Yuriy
  16. An anatomy of monopsony : Search frictions, amenities and bargaining in concentrated markets By David Berger; Kyle Herkenhoff; Andreas R. Kostol; Simon Mongey
  17. Power to the teens? A model of parents' and teens' collective labor supply By Jos\'e Alfonso Mu\~noz-Alvarado

  1. By: Jurkat, Anne; Klump, Rainer; Schneider, Florian
    Abstract: The empirical evidence on how industrial robots affect employment and wages is very mixed. Our meta-study helps to uncover the potentially true effect of industrial robots on labor market outcomes and to identify drivers of the heterogeneous empirical results. By means of a systematic literature research, we collected 53 papers containing 2143 estimations for the impact of robot adoption on wages. We observe only limited evidence for a publication bias in favor of negative results. The genuine overall effect of industrial robots on wages is close to zero and both statistically and economically insignificant. With regard to the drivers of heterogeneity, we find that more positive results are obtained if primary estimations a) include more countries in their sample, b) control for ICT capital, demographic developments, or tenure, c) focus on employees that remain employed in the same sector, d) consider only non-manufacturing industries, e) are specified in long differences, and f) come from a peer-reviewed journal article. More negative effects, in turn, are reported for primary estimations that are i) weighted, ii) aggregated at country level, iii) control for trade exposure, iv) and consider only manufacturing industries. We also find some evidence for skill-biased technological change. The magnitude of that effect is albeit small and less robust than one might expect in view of skill-biased technological change. We find little evidence for data dependence.
    Keywords: robots, meta study, labor markets, wages, IFR, publication bias, job polarization, gender wage gap, skill bias
    JEL: E24 J23 J31 J24 O33
    Date: 2023
  2. By: Belloc, Ignacio (University of Zaragoza); Molina, José Alberto (University of Zaragoza); Velilla, Jorge (University of Zaragoza)
    Abstract: This paper analyses the impact of current and past lottery wins on household labor supply in the United Kingdom using data from the British Household Panel Survey 1997-2008. Estimating individual fixed-effects models, we show that male annual hours of work do not respond to lottery wins, whilst female hours of work decrease in response to current and past lottery wins. Specifically, current female annual hours of work decrease by about 26 hours if the partner has won the lottery during that year, and about 28 hours per year if he won the lottery the previous year. When we include large lottery wins (lottery wins worth more than £500), we find a compensation effect within the household, as the recipient's spouse increases his/her hours of work. These results are inconsistent with household unitary models, and suggest that large shocks in unearned income may have a persistent impact on household behavior.
    Keywords: household labor supply, lottery win, fixed-effects models, British Household Panel Survey
    JEL: D13 D31 J22
    Date: 2023–07
  3. By: Sondergeld, Virginia (DIW Berlin); Wrohlich, Katharina (DIW Berlin)
    Abstract: We analyze the impact of women's managerial representation on the gender pay gap among employees on the establishment level using German Linked-Employer-Employee- Data from the years 2004 to 2018. For identification of a causal effect we employ a panel model with establishment fixed effects and industry-specific time dummies. Our results show that a higher share of women in management significantly reduces the gender pay gap within the firm. An increase in the share of women in first-level management e.g. from zero to above 33 percent decreases the adjusted gender pay gap from a baseline of 15 percent by 1.2 percentage points, i.e. to roughly 14 percent. The effect is stronger for women in second-level than first-level management, indicating that women managers with closer interactions with their subordinates have a higher impact on the gender pay gap than women on higher management levels. The results are similar for East and West Germany, despite the lower gender pay gap and more gender egalitarian social norms in East Germany. From a policy perspective, we conclude that increasing the number of women in management positions has the potential to reduce the gender pay gap to a limited extent. However, further policy measures will be needed in order to fully close the gender gap in pay.
    Keywords: gender pay gap, women in management, board diversity, two-way fixed effects, linked employer-employee data
    JEL: J16 J31 J71
    Date: 2023–07
  4. By: Nicolas Gonne
    Abstract: The Dutch labour market is strong but very tight. The unprecedently fast recovery from the pandemic, fast-changing skill demand, low hours worked, and the segmentation of the labour market contribute to labour shortages, weighing on growth potential and jeopardising the green and digital transitions. To tackle shortages, lifting labour supply is a necessary complement to raising productivity, as labour-saving innovation alone is unlikely to significantly reduce overall labour demand. Lowering the effective tax rate on moving from part-time to full-time employment and streamlining income-dependent benefits while improving access to childcare would both increase labour input and reduce gender inequalities in career prospects, incomes, and social protection. Narrowing regulatory gaps between regular and non-standard forms of employment further would alleviate shortages by facilitating transitions between occupations. Better integrating people with a migrant background and easing medium-skill labour migration in specific occupations would help to fill vacancies, especially those related to the lowcarbon transition. Scaling up the individualised training scheme while ensuring quality and providing stronger incentives for co-financing by employers would boost the supply of skills and promote growth in expanding industries. Rewarding teachers in schools where shortages are significant and facilitating mobility between vocational and academic tracks would improve equality in education and better prepare the future workforce.
    Keywords: education, gender, labour market segmentation, labour migration, labour shortages, labour supply, lifelong learning, tax-benefits system, the Netherlands
    JEL: I28 J16 J20 J42 J60 M53
    Date: 2023–08–22
  5. By: Bernhard Boockmann; Martin Kroczek; Natalie Laub
    Abstract: We study heterogeneity in the effects of two pension reforms in Germany that closed pathways into early retirement: the abolition of an old-age pension scheme for women and the abolition of a pension after unemployment or part-time work. We focus on heterogeneity with respect to several occupational characteristics. Both reforms had significant effects on individual employment states, and in both cases the effects differ significantly by occupation. The positive effect on employment is smaller in occupations with higher job strain and, in case of the old-age pension for women, the effect on unemployment is larger. The effects also differ by occupational tasks, PC use and the introduction of new technologies.
    Keywords: Pension reforms, effect heterogeneity, occupational demands, occupational tasks
    JEL: J18 J22 J26
    Date: 2023–07
  6. By: Ferdinando Monte (Georgetown University); Charly Porcher (Georgetown University); Esteban Rossi-Hansberg (University of Chicago)
    Abstract: We study the adoption of remote work within cities and its effect on city structure and welfare. We develop a dynamic model of a city in which workers can decide to work in the central business district (CBD) or partly at home. Working in the CBD allows them to interact with other commuters, which enhances their productivity through a standard production externality, but entails commuting costs. Switching between modes of labor delivery is costly, and workers face idiosyncratic preference shocks for remote work. We characterize the parameter set in which the city exhibits multiple stationary equilibria. Within this set, a coordination mechanism can lead to stationary equilibria in which most workers commute or most of them work partially from home. In these cases, large shocks in the number of commuters, like the recent lockdowns and self-isolation generated by the COVID-19 pandemic, can result in dynamic paths that make cities converge to a stationary equilibrium with large fractions of remote workers. Using cell-phone-based mobility data for the U.S., we document that although most cities experienced similar reductions in CBD trips during the pandemic, trips in the largest cities have stabilized at levels that are only about 60% of pre-pandemic levels. In contrast, smaller cities have, on average, returned to pre-pandemic levels. House price panel data by city show consistent changes in house price CBD-distance gradients. We estimate the model for 274 U.S. cities and show that cities that have stabilized at a large fraction of remote work are much more likely to have parameters that result in multiple stationary equilibria. Our results imply welfare losses in these cities that average 2.7%.
    Keywords: city structure, commuting, COVID-19
    JEL: R23 J24 C62
    Date: 2023–08
  7. By: Moscelli, G.;; Sayli, M.;; Blanden, J.;; Mello, M.;; Castro-Pires, H.;; Bojke, C.;
    Abstract: Excessive turnover can significantly impair an organization’s performance. Using high-quality administrative data and staggered difference-in-differences strategies, we evaluate the impact of a programme that encouraged public hospitals to increase staff retention by providing data and guidelines on how to improve the non-pecuniary aspects of nursing jobs. We find that the programme has decreased the nurse turnover rate by 4.49%, decreased exits from the public hospital sector by 5.38%, and reduced mortality within 30 days from hospital admission by 3.45%, preventing 11, 400 deaths. Our results are consistent with a theoretical model in which information is provided to managers of multi-unit organizations, who trade off coordinating decisions across units and adapting them to local conditions.
    Keywords: labor supply; workforce retention; non-monetary incentives; hospital care; staggered difference-in-differences;
    JEL: J32 J38 J45 J63 I11 C22
    Date: 2023–08
  8. By: Bauluz, Luis; Bukowski, Pawel; Fransham, Mark; Lee, Annie; López Forero, Margarita; Novokmet, Filip; Breau, Sébastien; Lee, Neil; Malgouyres, Clement; 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: J30 R10 R23
    Date: 2023–08–01
  9. By: Francesco Trebbi; Miao Ben Zhang; Michael Simkovic
    Abstract: One of the key questions in the study of regulation is whether the costs of regulatory compliance fall homogeneously on all businesses or whether certain firms, for instance small ones, are especially penalized. We quantify firms’ compliance costs in terms of their labor spending to adhere to government rules. Using comprehensive establishment-level occupational microdata and occupation-specific task information, we recover the proportion of a firm’s wage bill attributable to employees engaged in regulatory compliance. On average for 2002-14, regulatory costs account for 1.34% to 3.33% of a firm’s wage bill, totaling up in 2014 to $239 billion, and to $289 billion when adding capital equipment costs. Our findings reveal an inverted-U relation between firms’ regulatory compliance costs and their scale of employment, indicating that firms with approximately 500 employees face compliance costs that are about 40 percent higher as a share of total wages compared to small or large firms. Finally, we develop an instrumental variable methodology to disentangle the influence of regulatory requirements and enforcement in driving firms’ compliance costs.
    Keywords: regulation, compliance costs, labor task, occupation, firm growth, economies of scale, regulatory requirement, enforcement
    JEL: P00
    Date: 2023
  10. By: Aline Bütikofer (Norwegian School of Economics); Antonio Dalla-Zuanna (Bank of Italy); Kjell Salvanes (Norges Handelshøyskole)
    Abstract: This paper studies the consequences of the buildup of a new economic sector—the Norwegian petroleum industry—on investment in human capital. We assess both short-term and long-term effects for a broad set of educational margins, by comparing individuals in regions exposed to the new sector with individuals in unexposed regions. Importantly, we analyze how the effects and the mechanisms change as the sector develops. Our results indicate that an initial increase in the high school dropout rate is short-lived both because dropouts get their degrees later as adults, and because later-born cohorts adapt to the new needs of the industry by enrolling more in vocational secondary education. We also observe a decrease in academic high school and college enrollment except for engineering degrees. Financial incentives to both completing high school and field of study, are the most likely channels driving these effects.
    Keywords: petroleum industry, Norway, high school dropout rate
    JEL: O13 J24 I26
    Date: 2023–08
  11. By: Hörnig, Lukas
    Abstract: Between 2003 and 2005, the German government passed an unprecedented package of labor market reforms, commonly known as the Hartz-reforms. This led to a "labor market miracle" with sharply declining unemployment rates. This paper examines these reforms at the regional level and provides a comprehensive picture of whether the reforms have exacerbated or reduced regional disparities. I apply a regional difference-in-differences framework commonly used in the minimum wage evaluation literature to analyze the effect of the reforms on employment at the county level. The empirical results show that while all counties benefited from the Hartz-reforms, more prosperous counties derived a stronger benefit than those with high unemployment rates. The evidence is stronger for West Germany than for East Germany. Overall, the reforms have not improved economic performance homogeneously, but have actually increased regional disparities.
    Keywords: Regional growth, policy evaluation, regional convergence, Hartz-reforms
    JEL: R11 J48 O47
    Date: 2023
  12. By: Stefan Apostol; Eduardo Hernández-Rodríguez
    Abstract: Digitalisation has become a clear policy objective. Regions want to digitalise their economies to benefit from the digital world. This paper provides empirical evidence on how the adoption of new digital web technologies is shaped by previous regional digital capabilities. The analysis is based upon an economic complexity and relatedness framework using novel data on digital web technologies’ adoption for 278 European NUTS-2 regions between years 2000-2022. Results show that regions tend to adopt new digital web technologies when they already master related digital capabilities. This paper also shows how digital complexity is associated with labour productivity gains at the regional level. Conclusions shed light on how regions are adopting digital web technologies and serve as a tool for policymakers.
    Keywords: Digitalisation; digital web technologies; relatedness; economic complexity; productivity; European regions
    JEL: L86 O14 O33 R11
    Date: 2023–08
  13. By: Jin Liu (University of Science and Technology of China); Xingchen Xu (University of Washington); Yongjun Li (University of Science and Technology of China); Yong Tan (University of Washington)
    Abstract: With the advent of general-purpose Generative AI, the interest in discerning its impact on the labor market escalates. In an attempt to bridge the extant empirical void, we interpret the launch of ChatGPT as an exogenous shock, and implement a Difference-in-Differences (DID) approach to quantify its influence on text-related jobs and freelancers within an online labor marketplace. Our results reveal a significant decrease in transaction volume for gigs and freelancers directly exposed to ChatGPT. Additionally, this decline is particularly marked in units of relatively higher past transaction volume or lower quality standards. Yet, the negative effect is not universally experienced among service providers. Subsequent analyses illustrate that freelancers proficiently adapting to novel advancements and offering services that augment AI technologies can yield substantial benefits amidst this transformative period. Consequently, even though the advent of ChatGPT could conceivably substitute existing occupations, it also unfolds immense opportunities and carries the potential to reconfigure the future of work. This research contributes to the limited empirical repository exploring the profound influence of LLM-based generative AI on the labor market, furnishing invaluable insights for workers, job intermediaries, and regulatory bodies navigating this evolving landscape.
    Date: 2023–08
  14. By: Koji Takahashi; Sumiko Takaoka
    Abstract: Using employee reviews accumulated in online platform service and ESG scores, this paper studies the relationship between firms' workforce benefits and their credit risk. We provide evidence that the sign of the effect of employee treatment on credit spreads depends on the sectoral intensity of human capital. In a sector with high intensity of human capital, especially in the manufacturing sector, more generous benefits for workers lead to lower credit spreads. In contrast, in a sector with low intensity, they are associated with larger credit spreads. We also find evidence that the lowering effect on credit spreads in sectors with high human capital intensity is mainly due to increased labor productivity.
    Keywords: employee satisfaction, online employee review, credit risk, labor risk
    JEL: G12 J28 J32
    Date: 2023–07
  15. By: Sergeyev, Dmitriy (Bocconi University); Lian, Chen (UC Berkeley); Gorodnichenko, Yuriy (University of California, Berkeley)
    Abstract: We study the psychological costs of financial constraints and their economic consequences. Using a representative survey of U.S. households, we document the prevalence of financial stress in U.S. households and a strong relationship between financial stress and measures of financial constraints. We incorporate financial stress into an otherwise standard dynamic model of consumption and labor supply. We emphasize two key results. First, a psychology-based theory of poverty traps requires two equally important components: financial stress itself and naivete about financial stress. Specifically, sophisticates save enough to escape high-stress states, because they understand that doing so alleviates the economic consequences of financial stress. On the other hand, naifs dis-save, fall into a poverty trap, and incur high welfare losses. Second, the financial stress channel can reverse the counterfactual negative wealth effect on labor supply because relieving stress frees up cognitive resources for productive work. Financial stress also has macroeconomic implications on wealth inequality and fiscal multipliers.
    Keywords: household finance, survey, stress, behavioral economics
    JEL: E7 G5
    Date: 2023–07
  16. By: David Berger; Kyle Herkenhoff; Andreas R. Kostol; Simon Mongey
    Abstract: We contribute a theory in which three channels interact to determine the degree of monopsony power and therefore the markdown of a worker’s spot wage relative to her marginal product: (1) heterogeneity in worker-firm-specific preferences (non-wage amenities), (2) firm granularity, and (3) off- and on-the-job search frictions. We use Norwegian data to discipline each channel and then reproduce new reduced-form empirical relationships between market concentration, job flows, wages and wage inequality. In doing so we provide a novel method for clustering occupations into local labor markets. Our main exercise quantifies the contribution of each channel to income inequality and wage markdowns. The average markdown is 21 percent in our baseline estimation. Removing nonwage amenity dispersion narrows them by a third. Giving the next-lowest-ranked competitor a seat at the bargaining table narrows them by half, suggesting that granularity and strategic interactions in the bargaining process is an important source of markdowns. Removing search frictions narrows them by two-thirds. Each counterfactual reduces wage inequality and increases welfare.
    Keywords: Monopsony, Inequality.
    JEL: E2 J2 J42
    Date: 2023–06–15
  17. By: Jos\'e Alfonso Mu\~noz-Alvarado
    Abstract: Teens make life-changing decisions while constrained by the needs and resources of the households they grow up in. Household behavior models frequently delegate decision-making to the teen or their parents, ignoring joint decision-making in the household. I show that teens and parents allocate time and income jointly by using data from the Costa Rican Encuesta Nacional de Hogares from 2011 to 2019 and a conditional cash transfer program. First, I present gender differences in household responses to the transfer using a marginal treatment effect framework. Second, I explain how the gender gap from the results is due to the bargaining process between parents and teens. I propose a collective household model and show that sons bargain cooperatively with their parents while daughters do not. This result implies that sons have a higher opportunity cost of attending school than daughters. Public policy targeting teens must account for this gender disparity to be effective.
    Date: 2023–06

This nep-lma issue is ©2023 by Joseph Marchand. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.