nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2023‒09‒18
twenty-two papers chosen by
Joseph Marchand, University of Alberta

  1. Labour Supply and Firm Size By Lin Shao; Faisal Sohail; Emircan Yurdagul
  2. Location, Location, Location By David Card; Jesse Rothstein; Moises Yi
  3. Skills, Majors, and Jobs: Does Higher Education Respond? By Johnathan G. Conzelmann; Steven W. Hemelt; Brad Hershbein; Shawn M. Martin; Andrew Simon; Kevin M. Stange
  4. Industry Wage Differentials: A Firm-Based Approach By David Card; Jesse Rothstein; Moises Yi
  5. Raising State Minimum Wages, Lowering Community College Enrollment By Diane Whitmore Schanzenbach; Julia A. Turner; Sarah Turner
  6. Non-monetary Interventions, Workforce Retention and Hospital Quality: Evidence from the English NHS By Moscelli, Giuseppe; Sayli, Melisa; Blanden, Jo; Mello, Marco; Castro-Pires, Henrique; Bojke, Chris
  7. The Evolution of the Wage Elasticity of Labor Supply over Time By Elder, Todd E.; Haider, Steven J.; Orr, Cody
  8. The Changing Skill Content of Private Sector Union Coverage By Samuel Dodini; Michael F. Lovenheim; Alexander Willén
  9. Why Has Science Become an Old Man's Game? By Fons-Rosen, Christian; Gaule, Patrick; Hrendash, Taras
  10. Youth Labor Force Participation, Education, and Human Capital in Asia, by Gender, 1990-2019 By Barbara M. Fraumeni
  11. Job Polarization in the United States in the 21st Century: Studying Shifts in Employment Structures Using Occupations and Sectors By Rachel E. Dwyer
  12. The Short-Term Effects of Generative Artificial Intelligence on Employment: Evidence from an Online Labor Market By Xiang Hui; Oren Reshef; Luofeng Zhou
  13. Marriage and Work Among Prime-Age Men By Adam Blandin; John Bailey Jones; Fang Yang
  14. The Impact of the Transition and EU Membership on the Returns to Schooling in Europe By Patrinos, Harry A.; Rivera-Olvera, Angelica
  15. The Impact of Learning Disabilities on Children and Parental Outcomes: Evidence from the Panel Study of Income Dynamics By Rachel Cummings; Maria Jose Luengo-Prado
  16. Trends in Social Security Incentives in Belgium By Anne-Lore Fraikin; Alain Jousten; Mathieu Lefebvre
  17. Structural changes in the employment structure of India in 2012-2020: job upgrading or polarization? By Sudipa Sarkar; Sergio Torrejón Pérez
  18. Inventor Gender and Patent Undercitation: Evidence from Causal Text Estimation By Yael Hochberg; Ali Kakhbod; Peiyao Li; Kunal Sachdeva
  19. The Effects of Social Insurance Benefits on Leaving Employment at Older Ages in the Netherlands By Adriaan Kalwij; Arie Kapteyn
  20. Structural Shocks and Political Participation in the US By Marina Chugunova; Klaus Keller; Sampsa Samila
  21. Antitrust enforcement increases economic activity By Babina, Tania; Barkai, Simcha; Jeffers, Jessica; Karger, Ezra; Volkova, Ekaterina
  22. The Tail That Wagged the Dog: What Explains the Persistent Employment Effect of the 10-Day PPP Funding Delay? By Olga Gorbachev; Maria Jose Luengo-Prado; J. Christina Wang

  1. By: Lin Shao; Faisal Sohail; Emircan Yurdagul
    Abstract: Larger firms feature i) longer hours worked, ii) higher wages, and iii) smaller (larger) wage penalties for working long (short) hours. We reconcile these patterns in a general equilibrium model, which features the endogenous interaction of hours, wages, and firm size. In the model, workers willing to work longer hours sort into larger firms that offer a wage premium. Complementarities in hours worked generate wage penalties that increase with the distance from the average firm hours. We use the model to argue about the importance of the interaction between hours, wages, and firm size on inequality.
    Keywords: Firm dynamics; Labour markets
    JEL: E24 J2 J31
    Date: 2023–08
  2. By: David Card; Jesse Rothstein; Moises Yi
    Abstract: We use data from the Longitudinal Employer-Household Dynamics program to study the causal effects of location on earnings. Starting from a model with employer and employee fixed effects, we estimate the average earnings premiums associated with jobs in different commuting zones (CZs) and different CZ-industry pairs. About half of the variation in mean wages across CZs is attributable to differences in worker ability (as measured by their fixed effects); the other half is attributable to place effects. We show that the place effects from a richly specified cross sectional wage model overstate the causal effects of place (due to unobserved worker ability), while those from a model that simply adds person fixed effects understate the causal effects (due to unobserved heterogeneity in the premiums paid by different firms in the same CZ). Local industry agglomerations are associated with higher wages, but overall differences in industry composition and in CZ-specific returns to industries explain only a small fraction of average place effects. Estimating separate place effects for college and non-college workers, we find that the college wage gap is bigger in larger and higher-wage places, but that two-thirds of this variation is attributable to differences in the relative skills of the two groups in different places. Most of the remaining variation reflects the enhanced sorting of more educated workers to higher-paying industries in larger and higher-wage CZs. Finally, we find that local housing costs at least fully offset local pay premiums, implying that workers who move to larger CZs have no higher net-of-housing consumption.
    JEL: J31 J61 R23
    Date: 2023–08
  3. By: Johnathan G. Conzelmann; Steven W. Hemelt; Brad Hershbein; Shawn M. Martin; Andrew Simon; Kevin M. Stange
    Abstract: How do college students and postsecondary institutions react to changes in skill demand in the U.S. labor market? We quantify the magnitude and nature of response in the 4-year sector using a new measure of labor demand at the institution-major level that combines online job ads with geographic locations of alumni from a professional networking platform. Within a shift-share setup, we find that the 4-year sector responds. We estimate elasticities for undergraduate degrees and credits centered around 1.3, generally increasing with time horizon. Changes in non-tenure-track faculty allocations and the credits they teach partially mediate this overall response. We provide further evidence that the magnitude of the overall response depends on both student demand and institutional supply-side constraints. Our findings illuminate the nature of educational production in higher education and suggest that policy efforts that aim to align human capital investment with labor demand may struggle to achieve such goals if they target only one side of the market.
    JEL: I23 J23 J24
    Date: 2023–08
  4. By: David Card; Jesse Rothstein; Moises Yi
    Abstract: We revisit the estimation of industry wage differentials using linked employer-employee data from the U.S. LEHD program. Building on recent advances in the measurement of employer wage premiums, we define the industry wage effect as the employment-weighted average workplace premium in that industry. We show that cross-sectional estimates of industry differentials overstate the pay premiums due to unmeasured worker heterogeneity. Conversely, estimates based on industry movers understate the true premiums, due to unmeasured heterogeneity in pay premiums within industries. Industry movers who switch to higher-premium industries tend to leave firms in the origin sector that pay above-average premiums and move to firms in the destination sector with below-average premiums (and vice versa), attenuating the measured industry effects. Our preferred estimates reveal substantial heterogeneity in narrowly-defined industry premiums, with a standard deviation of 12%. On average, workers in higher-paying industries have higher observed and unobserved skills, widening between-industry wage inequality. There are also small but systematic differences in industry premiums across cities, with a wider distribution of pay premiums and more worker sorting in cities with more high-premium firms and high-skilled workers.
    JEL: J31 J62
    Date: 2023–08
  5. By: Diane Whitmore Schanzenbach; Julia A. Turner; Sarah Turner
    Abstract: While the direct impacts of minimum wage changes on employment have received considerable attention, these policy changes have the potential to impact skill attainment by changing the opportunity cost of college enrollment. Using institutional data on college enrollment and program completion, we find that enrollment falls markedly among students at public two-year institutions in response to increases in the minimum wage. The largest enrollment effects are seen for those students who are enrolled in part-time courses of study at community colleges. The effect of minimum wage changes on credential attainment is limited to modest effects for women at the associate degree level, suggesting that the changes primarily impact the enrollment of students who are unlikely to have been diverted from degree attainment.
    JEL: I23 J24
    Date: 2023–08
  6. By: Moscelli, Giuseppe (University of Surrey); Sayli, Melisa (University of Surrey); Blanden, Jo (University of Surrey); Mello, Marco (University of Aberdeen); Castro-Pires, Henrique (University of Surrey); Bojke, Chris (University of Leeds)
    Abstract: Excessive turnover can signicantly impair an organization's performance. Using high-quality administrative data and staggered dierence-in-dierences 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
  7. By: Elder, Todd E. (Michigan State University); Haider, Steven J. (Michigan State University); Orr, Cody (U.S. Census Bureau)
    Abstract: The uncompensated wage elasticity of labor supply is a fundamental parameter in economics. Despite its central role, very few papers have studied directly how it has changed over time. We examine the evolution of the uncompensated labor supply elasticity using cross-sectional methods over the last four decades. We find robust evidence that the elasticities weakly increased between 2000 and 2020, which represents a striking reversal from the sizeable declines for single and married women between 1979 and 2000. We additionally find that these changes arose almost entirely on the extensive margin. We then conduct a series of counterfactual simulations to identify which factors are most responsible for these trends.
    Keywords: labor supply, discrete choice models
    JEL: D10 J22
    Date: 2023–08
  8. By: Samuel Dodini; Michael F. Lovenheim; Alexander Willén
    Abstract: Concurrent with the precipitous decline in private sector unionization over the past half century, there has been a shift in the type of work covered by unions. We take a skill-based approach to studying this shift, using data from the Current Population Survey combined with occupation-specific task requirements from the Dictionary of Occupational Titles and the Occupational Information Network. We partition skills into four groups based on two dimensions of task requirements: non-routine cognitive, non-routine manual, routine cognitive, and routine manual. For both men and women, private sector unionized jobs have changed to require more non-routine, cognitive skills and for women, less routine/manual skills. Union, non-union skill differences have grown, with unionized jobs requiring relatively more non-routine cognitive skill for both groups but also relatively more routine skills. We decompose these skill changes into: (1) changes in skills within an occupation, (2) changes in worker concentration across existing occupations, and (3) changes to the occupational mix from entry and exit. Most of the skill changes we document are driven by the second two forces. Finally, we discuss how this evidence can be reconciled with a model of skill-biased technological change that explicitly accounts for the institutional framework surrounding collective bargaining.
    JEL: J24 J5
    Date: 2023–08
  9. By: Fons-Rosen, Christian (University of California, Merced); Gaule, Patrick (University of Bristol); Hrendash, Taras (CERGE-EI)
    Abstract: We investigate the causes and consequences of the aging of the scientific workforce. Using novel data on the population of US chemistry faculty members over fifty years, we find that the secular increase in the age of the academic workforce has been mainly driven by the slowdown in faculty hiring combined with later retirements. By contrast, changes in the age at which scientists start their careers only contribute to about 20% of aging. Hiring more new faculty members could rejuvenate the scientific workforce and boost scientific productivity.
    Keywords: aging, science, universities, knowledge production
    JEL: O31 J24 J26
    Date: 2023–08
  10. By: Barbara M. Fraumeni
    Abstract: Of great importance to the future World economy is the future labor force of Asia, as Asia is by far the most populous region in the World. Expected future levels of education, very young and youth population, youth employment and unemployment, dependency rates, human capital per capita, and the sources of growth in the potential future labor force are described in this paper with an emphasis on differences by gender and differences across regions. Some comparisons between China and India and between Asia and selected other regions and aggregates are also included. Gini human capital coefficients are constructed for regions in Asia and the selected other regions and aggregates are constructed to reinforce the importance of recognizing gender in any analysis.
    JEL: I21 J16 J21 J24 O53
    Date: 2023–08
  11. By: Rachel E. Dwyer (The Ohio State University)
    Abstract: Job polarization was first identified in the US in the 1990s, when employment growth concentrated in the highest and lowest wages jobs with much less growth in middle wage jobs. Research since then has identified continuing polarizing pressures in the US and Europe, but also evidence of job upgrading in some periods even in the US. Prior research on job polarization often focuses on the relationship between individual wage inequality and inequality between jobs defined as occupations. I argue for the value of a focus on the structure of job inequality as distinct from individual wage inequality and, furthermore, argue for the inclusion of sectoral divisions in a jobs-based approach. With that conceptual underpinning, I analyze CPS data and build on prior work to study the first two decades of the 2000s, up to the first pandemic year of 2020. I disaggregate job growth by sector, employment contract, and sociodemographic groups. I find that the pattern of job polarization shifted in the 2000s where economic recessions became increasingly crucial in shaping the evolution of job growth. I also find striking race/ethnic disparities in job growth that reinforce both the privileged position of white workers in the US labor market, but also challenges for white workers in middle-wage jobs. Black and Hispanic workers also face particularly significant obstacles in reaching the highest-wage jobs. I close with policy recommendations for supporting equitable job growth.
    Keywords: Employment growth, job quality, sectoral change, gender and work
    Date: 2023–08
  12. By: Xiang Hui; Oren Reshef; Luofeng Zhou
    Abstract: Generative Artificial Intelligence (AI) holds the potential to either complement knowledge workers by increasing their productivity or substitute them entirely. We examine the short-term effects of the recent release of the large language model (LLM), ChatGPT, on the employment outcomes of freelancers on a large online platform. We find that freelancers in highly affected occupations suffer from the introduction of generative AI, experiencing reductions in both employment and earnings. We find similar effects studying the release of other image-based, generative AI models. Exploring the heterogeneity by freelancers’ employment history, we do not find evidence that high-quality service, measured by their past performance and employment, moderates the adverse effects on employment. In fact, we find suggestive evidence that top freelancers are disproportionately affected by AI. These results suggest that in the short term generative AI reduces overall demand for knowledge workers of all types, and may have the potential to narrow gaps among workers.
    Keywords: generative AI, large language model (LLM), online labor market
    Date: 2023
  13. By: Adam Blandin; John Bailey Jones; Fang Yang
    Abstract: Married men work substantially more hours than men who have never been married, even after controlling for observables. Panel data reveal that much of this gap is attributable to an increase in work in the years leading up to marriage. Two potential explanations for this increase are: (i) men hit by positive labor market shocks are more likely to marry; and (ii) the prospect of marriage increases men’s labor supply. We quantify the relative importance of these two channels using a structural life-cycle model of marriage and labor supply. Our calibration implies that marriage substantially increases male labor supply. Counterfactual simulations suggest that if men were unable to marry, prime-age male work hours would fall by 7%, and if marriage rates fell to the extent observed, men born around 1980 would work 2% fewer hours than men born around 1960.
    Keywords: labor supply; family structure; marriage; marital wage premium
    JEL: D15 J1 J22 J31
    Date: 2023–08–29
  14. By: Patrinos, Harry A. (World Bank); Rivera-Olvera, Angelica (World Bank)
    Abstract: Countries across Eastern Europe and Central Asia are in their third decade of independence. What impact does this have on the skills premium and does accession to the European Union have an impact on the returns to education? The returns to education in 28 transition and 20 non-transition countries in Europe and Central Asia are analyzed using panel data analysis and difference-in-difference methods to estimate the impact of transition and EU accession. It is found that the transition from a centrally planned economy to a market economy increases the returns to schooling in post-socialist countries positively and significantly, especially through the EU accession channel.
    Keywords: returns to education, transition, technological change
    JEL: I26 J31
    Date: 2023–07
  15. By: Rachel Cummings; Maria Jose Luengo-Prado
    Abstract: We document the characteristics of children and young adults identified in the Panel Study of Income Dynamics as having a learning disability and study whether legislative changes in diagnosis criteria have had a noticeable effect determining who receives a diagnosis. We further document that children and young adults identified as a having a learning disability experience less desirable outcomes early in life, including trouble with the police, drug use, violent behavior, incarceration, self-reported low levels of well-being, lower educational attainment, and less favorable labor market outcomes. We also find that the mothers of children diagnosed with learning disabilities are less likely than other mothers to participate in the labor market.
    Keywords: learning disabilities; young adult outcomes; labor market outcomes
    JEL: I24 J24
    Date: 2023–07–01
  16. By: Anne-Lore Fraikin; Alain Jousten; Mathieu Lefebvre
    Abstract: In Belgium, a series of social security reforms have been implemented over the years with the overarching goal of increasing the labor force participation through better work incentives. Using individual-level administrative data, the paper studies the impact of those incentive-based reforms on observed changes in older workers’ employment patterns. We investigate how social security incentives and particularly their changes over time can explain the retirement decision. We calculate indicators of benefit entitlement and derive retirement incentive measures. Using micro-estimation techniques, we find that more generous retirement provision contribute to earlier retirement. Counterfactual reform simulations show strongly incentivizing effects at lower ages and more mixed results at higher ages – particularly for men.
    JEL: I30 J14 J26
    Date: 2023–08
  17. By: Sudipa Sarkar (National Law School of India University (NLSIU)); Sergio Torrejón Pérez (European Commission - JRC)
    Abstract: This paper analyses employment growth across occupations and sectors in India for the period that goes from 2011-12 to 2019-20. Using data from the National Sample Survey Organisation and the Periodic Labour Force Survey, this study finds evidence of mid-upgrading (relatively higher employment growth in low-mid paid and high-paid jobs) in India during the study period, where jobs are ranked using median daily wages in 2011-12. A decomposition analysis reveals that this pattern is due to the employment growth in jobs in Construction, Wholesale & retail trade, and Transport, storage and communication industries in India. The study also finds a reduction in the employment share of routine task intensive occupations along with a growth in employment in non-routine task intensive occupations (both manual and cognitive) in both rural and urban India.
    Keywords: employment change; job polarization; technological change; India
    Date: 2023–07
  18. By: Yael Hochberg; Ali Kakhbod; Peiyao Li; Kunal Sachdeva
    Abstract: Implementing a state-of-the-art machine learning technique for causal identification from text data (C-TEXT), we document that patents authored by female inventors are under-cited relative to those authored by males. Relative to what the same patent would be predicted to receive had the lead inventor instead been male, patents with a female lead inventor receive 10% fewer citations. Patents with male lead inventors tend to undercite past patents with female lead inventors, while patent examiners of both genders appear to be more even-handed in the citations they add to patent applications. For female inventors, market-based measures of patent value load significantly on the citation counts that would be predicted by C-TEXT, but do not load significantly on actual forward citations. The under-recognition of female-authored patents likely has implications for the allocation of talent in the economy.
    JEL: C13 J16 J24 J71 O30
    Date: 2023–08
  19. By: Adriaan Kalwij; Arie Kapteyn
    Abstract: In the Netherlands, from 1989 to 2013, in the age group 55-63 the annual exit rate from employment to receiving social insurance benefits in the following year decreased from around 17 percent to 7 percent for men, and from 14 percent to 5 percent for women. We found that less generous social insurance benefits have had small but significant negative effects on these exit rates: The annual exit rate to social insurance benefit receipt next year (at ages 56-64) would have been about 14 percent higher for both men and women in 2013 should social insurance benefits schemes of 1989 still have been in place. This increase amounts to staying, on average, three months longer in employment from age 55 onwards in 2013 than in 1989. These findings are driven to some extent by the reduction in the maximum duration of unemployment insurance benefits in 2007, but predominantly by making (early) retirement schemes actuarially fair from 2006 onwards. The increase in disability insurance’s income replacement rate in 2006 has led to a slight increase in the exit rate from employment, conditional on eligibility. As the estimated effects of changes in the social insurance benefits from 1989 to 2013 on working beyond age 55 are relatively small, they suggest the importance of other factors such as changes in workers’ skills, improved health (on which we provide some evidence), and social insurance’s tighter eligibility criteria.
    JEL: H0 J26
    Date: 2023–08
  20. By: Marina Chugunova (MPI-IC); Klaus Keller (MPI-IC); Sampsa Samila (IESE Business School)
    Abstract: This paper examines the impact of the large structural shocks -- automation and import competition -- on voter turnout during US federal elections from 2000 to 2016. Although the negative income effect of both shocks is comparable, we find that political participation decreases significantly in counties more exposed to industrial robots. In contrast, the exposure to rising import competition does not reduce voter turnout. A survey experiment reveals that divergent beliefs about the effectiveness of government intervention drive this contrast. Our study highlights the role of beliefs in the political economy of technological change.
    Keywords: automation; trade; labor demand; voter turnout;
    JEL: D72 J23 F16
    Date: 2023–08–21
  21. By: Babina, Tania; Barkai, Simcha; Jeffers, Jessica; Karger, Ezra; Volkova, Ekaterina
    Abstract: We hand-collect and standardize information describing all 3, 055 antitrust lawsuits brought by the Department of Justice (DOJ) between 1971 and 2018. Using restricted establishment-level microdata from the U.S. Census, we compare the economic outcomes of a non-tradable industry in states targeted by DOJ antitrust lawsuits to outcomes of the same industry in other states that were not targeted. We document that DOJ antitrust enforcement actions permanently increase employment by 5.4% and business formation by 4.1%. Using an event-study design, we find (1) a sharp increase in payroll that exceeds the increase in employment, meaning that DOJ antitrust enforcement increases average wages, (2) an economically smaller increase in sales that is statistically insignificant, and (3) a precise increase in the labor share. While we cannot separately measure the quantity and price of output, the increase in production inputs (employment), together with a proportionally smaller increase in sales, strongly suggests that these DOJ antitrust enforcement actions increase the quantity of output and simultaneously decrease the price of output. Our results show that government antitrust enforcement leads to persistently higher levels of economic activity in targeted industries.
    Keywords: antitrust enforcement, economic activity, employment, business formation
    JEL: L4 E24 K21 J21
    Date: 2023
  22. By: Olga Gorbachev; Maria Jose Luengo-Prado; J. Christina Wang
    Abstract: This study explores the mechanisms explaining the large, persistent effect of the 10-day funding delay in the 2020 Paycheck Protection Program (PPP) on employment recovery during the COVID-19 pandemic, as estimated by Doniger and Kay (2021). We find that the top 1 percent of urban counties by population fully account for the significant effect of the delay on county-level employment. The strong correlation between worse loan delay and slower employment growth in these counties is due to a factor commonly omitted from analyses: The nature of business and the high rate of human interactions in major urban centers render these areas exceptionally and persistently vulnerable to infectious diseases. Moreover, we find that receiving more PPP funding and more transfers from other pandemic-related assistance programs contributed significantly more to local economic recovery compared with receiving PPP funds earlier.
    Keywords: COVID-19; Paycheck Protection Program; small business credit; remote work; employment
    JEL: E24 G28 H81 J21
    Date: 2023–07–01

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