nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2023‒09‒11
thirteen papers chosen by
Joseph Marchand, University of Alberta

  1. Are Managers More Machiavellian than Other Employees? By Baktash, Mehrzad B.; Jirjahn, Uwe
  2. Digitalization: Labour Markets By Alex Chernoff; Gabriela Galassi
  3. Estimating the Impact of the Age of Criminal Majority: Decomposing Multiple Treatments in a Regression Discontinuity Framework By Michael G. Mueller-Smith; Benjamin Pyle; Caroline Walker
  4. The Welfare Economics of Reference Dependence By Daniel Reck; Arthur Seibold
  5. Air Pollution and Agricultural Productivity in a Developing Country By Merfeld, Joshua D.
  6. Micro vs Macro Labor Supply Elasticities: The Role of Dynamic Returns to Effort By Henrik Kleven; Claus Thustrup Kreiner; Kristian Larsen; Jakob Egholt Søgaard
  7. The gender composition of supervisor-worker dyads: Career blocks and gender pay gap By Paola Profeta; Giacomo Pasini; Valeria Maggian; Ludovica Spinola
  8. Minimum Wage and Skills -Evidence from Job Vacancy Data By Elodie Andrieu; Malgorzata Kuczera
  9. Digitalization: Productivity By Jeffrey Mollins; Temel Taskin
  10. The Elasticity of Substitution Between Skilled and Unskilled Labor in Developing Countries: A Directed Technical Change Perspective By Mr. Alberto Behar
  11. Accounting for cross-country output differences: A sectoral CES perspective By Jan Trenczek; Konstantin M. Wacker
  12. The Decline of Manufacturing Employment and the Rise of the Far-Right in Austria By Bekhtiar, Karim
  13. Parental Health Penalty on Adult Children's Employment: Gender Difference and Long-Term Consequence By Jiayi Wen; Haili Huang

  1. By: Baktash, Mehrzad B. (University of Trier); Jirjahn, Uwe (University of Trier)
    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: 2023–08
  2. By: Alex Chernoff; Gabriela Galassi
    Abstract: In this paper, the authors assess the relationship between digitalization and labour demand and supply, and how this relationship affects wages and income inequality. We also explore implications of recent digitalization trends for the future of work.
    Keywords: Digitalization; Labour markets
    JEL: I23 J24 O33
    Date: 2023–08
  3. By: Michael G. Mueller-Smith; Benjamin Pyle; Caroline Walker
    Abstract: This paper studies the impact of adult prosecution on recidivism and employment trajectories for adolescent, first-time felony defendants. We use extensive linked Criminal Justice Admin- istrative Record System and socio-economic data from Wayne County, Michigan (Detroit). Using the discrete age of majority rule and a regression discontinuity design, we find that adult prosecution reduces future criminal charges over 5 years by 0.48 felony cases (↓ 20%) while also worsening labor market outcomes: 0.76 fewer employers (↓ 19%) and $674 fewer earnings (↓ 21%) per year. We develop a novel econometric framework that combines standard regression discontinuity methods with predictive machine learning models to identify mechanism-specific treatment effects that underpin the overall impact of adult prosecution. We leverage these estimates to consider four policy counterfactuals: (1) raising the age of majority, (2) increasing adult dismissals to match the juvenile disposition rates, (3) eliminating adult incarceration, and (4) expanding juvenile record sealing opportunities to teenage adult defendants. All four scenarios generate positive returns for government budgets. When accounting for impacts to defendants as well as victim costs borne by society stemming from increases in recidivism, we find positive social returns for juvenile record sealing expansions and dismissing marginal adult charges; raising the age of majority breaks even. Eliminating prison for first-time adult felony defendants, however, increases net social costs. Policymakers may still find this attractive if they are willing to value beneficiaries (taxpayers and defendants) slightly higher (124%) than potential victims.
    JEL: C36 C45 J24 K14 K42
    Date: 2023–08
  4. By: Daniel Reck; Arthur Seibold
    Abstract: Empirical evidence suggests that individuals often evaluate options relative to a reference point, especially seeking to avoid losses. We undertake the first welfare analysis under reference-dependent preferences. We characterize the welfare impact of changes in reference points and prices, decomposing these into direct and behavioral effects. The sign of direct and behavioral effects depends on the form of reference-dependent payoffs; which of these effects matter for welfare depends on whether reference dependence reflects a bias or a normative preference. We derive sufficient statistics formulas quantifying the social welfare effects of changes in reference points and prices in terms of estimable reduced-form parameters and normative judgments. We illustrate these findings with an empirical application to reference dependence exhibited in German workers’ retirement decisions. We find positive social welfare effects of increasing the Normal Retirement Age, but ambiguous effects of financial incentives to postpone retirement.
    Keywords: reference-dependent preferences, loss aversion, welfare, pension reform
    JEL: D91 D60 H55 J26
    Date: 2023–08
  5. By: Merfeld, Joshua D. (KDI School of Public Policy and Management)
    Abstract: I document negative externalities of air pollution in the Indian agricultural sector. Using variation in pollution induced by changes in wind across years, I show that higher levels of pollution lead to decreased agricultural productivity, with large changes in productivity being common. The negative effects of pollution are larger in areas growing more labor-intensive crops, indicating that the pollution works at least partly through direct effects on labor productivity. Finally, combining wind direction with the rollout of coal plants, results indicate that pollution from coal plants has a larger effect on agricultural productivity than other types of pollution. Given that the agricultural sector is a refuge for the poor in many developing countries, these results suggest that the negative externalities of pollution may hit the poorest particularly hard.
    Keywords: pollution, productivity, agriculture, labor, India
    JEL: H40 I15 J22 O13 Q52 Q53
    Date: 2023–07
  6. By: Henrik Kleven; Claus Thustrup Kreiner; Kristian Larsen; Jakob Egholt Søgaard
    Abstract: A key contention in economics is the discrepancy between micro and macro elasticities of labor supply with respect to marginal tax rates. We revisit this question, focusing on the role of dynamic returns to effort among top earners. We develop a new model of earnings responses to taxes in the presence of dynamic returns. In this model, the returns to effort are delayed and mediated by job switches such as promotions within firms or movements between firms. Short-run micro elasticities are attenuated relative to the true long-run macro elasticity. We proceed by providing two main empirical analyses using rich administrative data from Denmark. The first part presents descriptive evidence on earnings and hours-worked patterns over the lifecycle that confirm the predictions of the theoretical model. The second part presents quasi-experimental evidence on earnings responses to taxes using discrete job switches. The empirical strategy is informed by the theoretical model, according to which job switches can be used to (partially) identify the macro elasticity of labor supply. The evidence shows that, at the top of the distribution, macro elasticities are much larger than micro elasticities due to dynamic compensation effects.
    JEL: C1 D6 E6 H2 H3 J2 J3
    Date: 2023–08
  7. By: Paola Profeta (Bocconi University); Giacomo Pasini (Université de Venise Ca' Foscari); Valeria Maggian (Université de Venise Ca' Foscari); Ludovica Spinola (Université de Venise Ca' Foscari)
    Abstract: We present how the gender composition of supervisor–worker dyads affects workers' outcomes. We use fine-grained longitudinal personnel data on workers from an Italian insurance company over the period 2014–2021 and assign to each worker the gender of the direct supervisor. We implement an individual worker's fixed-effect model, together with a dichotomous variable that captures pre- and post- COVID-19 period and time-varying individual characteristics. Our findings show that, although both male and female managers evaluate similarly the performance of male and female workers, female supervisors grant-lower amount of one-off bonus than male managers to both male and female workers. Moreover, both male and female workers have a lower probability of receiving a promotion from an employee of level VI to middle-managers when the manager is a female.s When exploiting a heterogeneous analysis by gender, results confirm that the gender of the supervisors does not affect workers' performance assessments, while it negatively impacts the total amount of bonus of both male and female workers. We interpret these results as evidence either that female managers are more severe to conform to a masculine gender stereotype associated with a leadership position that female managers are at the head of marginal areas and offices and hence receive less funds to provide bonuses and promotions to workers they supervise.
    Date: 2023–08–11
  8. By: Elodie Andrieu (Kings Business School, King's College London); Malgorzata Kuczera (University of Cambridge, Education Department)
    Keywords: minimum wage, job vacancy, labour hiring
    Date: 2023–07
  9. By: Jeffrey Mollins; Temel Taskin
    Abstract: We examine the relationship between digitalization and productivity, the factors that influence this relationship, and how digitalization’s effect on productivity could change firm behaviour.
    Keywords: Digitalization; Productivity
    JEL: E2 L11 O47 O51
    Date: 2023–08
  10. By: Mr. Alberto Behar
    Abstract: We develop a model of endogenous skill-biased technical change in developing countries. The endogenous response to a rise in skill supply counters the traditional substitution effect and dampens its role in reducing wage inequality. The model re-enforces consensus estimates of the elasticity of substitution between more/less educated workers by reconciling dispersed existing estimates. It also rationalizes estimates that were hitherto deemed implausible or model-inconsistent. We produce new estimates for developing countries with a novel global panel (finding values at or just above 2) and with Latin American data that facilitates analysis of dynamics (which reduce estimates to 1.7-1.8). We therefore shed new light on a parameter that is crucial for inequality, growth, and other key macroeconomic questions.
    Keywords: Skill-biased technical change; elasticity of substitution; skill premium; inequality; growth accounting
    Date: 2023–08–11
  11. By: Jan Trenczek (University of Mainz); Konstantin M. Wacker (University of Groningen)
    Abstract: Conventional development accounting attributes the enormous variation in output per worker across countries to differences in production factors and productivity. Our paper contributes to this literature along three important lines. First, we tackle the simplifying assumption of an aggregate Cobb-Douglas production function by estimating more flexible constant elasticity of substitution (CES) production functions in a tradable market sector and five subsectors across 38 countries. Our results suggest that physical and human capital are gross complements in production in all sectors, indicating that production factors play a larger role in explaining cross-country output differences than previously thought. Second, we find that differences in output per worker largely stem from the efficiency with which countries employ human capital. Third, we highlight the importance of sector-level analyses by showing that productivity differences play a smaller role in construction, distribution services, and financial and business services than in manufacturing and personal services.
    Keywords: Development accounting, Sector level, Production function, Elasticity of substitution, Total factor productivity
    JEL: F
    Date: 2023
  12. By: Bekhtiar, Karim (Institute for Advanced Studies Vienna, Austria)
    Abstract: In recent decades right-wing populist parties have experienced increased electoral success in many western democracies. This rise of the far-right, which is strongly built on the support of the working class, coincides with a sharp decline of the manufacturing sector. This paper analyzes the contribution of this manufacturing decline to the rise of the Austrian far-right. Overall the decline in manufacturing employment has strongly contributed to this rightward shift in the political landscape, with the manufacturing decline explaining roughly 43% of the observed increase in far-right vote-shares between 1995 and 2017. This effect is entirely driven by increases in natives unemployment rates, which increased considerably due to the manufacturing decline. Regarding the influences of the forces underlying the manufacturing decline, namely international trade and automation technologies, suggests that both forces contributed in roughly equal parts to this development.
    Keywords: Manufacturing, Trade, Robots, Voting, Populism
    JEL: D72 F14 J21 J23 O14 R23
    Date: 2023–08
  13. By: Jiayi Wen (Xiamen University); Haili Huang (Xiamen University)
    Abstract: This paper examines the long-term gender-specific impacts of parental health shocks on adult children's employment in China. We build up an inter-temporal cooperative framework to analyze household work decisions in response to parental health deterioration. Then employing an event-study approach, we establish a causal link between parental health shocks and a notable decline in female employment rates. Male employment, however, remains largely unaffected. This negative impact shows no abatement up to eight years that are observable by the sample. These findings indicate the consequence of ``growing old before getting rich'' for developing countries.
    Keywords: Gender Inequality; Female Labor Supply; Health Shock; Aging
    JEL: D13 I10 J22 O15
    Date: 2023–08–18

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