nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2023‒09‒25
twenty papers chosen by
Joseph Marchand, University of Alberta

  1. Labor Supply within the Firm By Battisti, Michele; Michaels, Ryan; Park, Choonsung
  2. Remote Work, Wages, and Hours Worked in the United States By Wulff Pabilonia, Sabrina; Vernon, Victoria
  3. New technologies and jobs in Europe By Stefania Albanesi; António Dias da Silva; Juan F. Jimeno; Ana Lamo; Alena Wabitsch
  4. Skills, Majors, and Jobs: Does Higher Education Respond? By Conzelmann, Johnathan G.; Hemelt, Steven W.; Hershbein, Brad J.; Martin, Shawn; Simon, Andrew; Stange, Kevin
  5. Long-run consequences of informal elderly care and implications of public long-term care insurance By Korfhage, Thorben; Fischer-Weckemann, Björn
  6. The Gender Pay Gap: Micro Sources and Macro Consequences By Morchio, Iacopo; Moser, Christian
  7. Industry Wage Differentials: A Firm-Based Approach By David Card; Jesse Rothstein; Moises Yi
  8. Making their own weather? Estimating employer labour-market power and its wage effects By Pedro S. Martins; Antonio P. Melo
  9. International Trade and Job Polarization: Evidence at the Worker Level By Keller, Wolfgang; Utar, Hale
  10. The Impact of Criminal Financial Sanctions: A Multi-State Analysis of Survey and Administrative Data By Keith Finlay; Matthew Gross; Carl Lieberman; Elizabeth Luh; Michael G. Mueller-Smith
  11. Women Workers in Essential British Metal and Chemical Industries during the Second World War and the Immediate Post-war Years By Hart, Robert A.; Roberts, J. Elizabeth
  12. Gender pay gap and Employment choice in Nigeria By Ekpeyong, Paul
  13. Youth Labor Force Participation, Education, and Human Capital in Asia, by Gender, 1990-2019 By Fraumeni, Barbara M.
  14. Bidding for Talent: A Test of Conduct in a High-Wage Labor Market By Roussille, Nina; Scuderi, Benjamin
  15. Antitrust Enforcement Increases Economic Activity By Tania Babina; Simcha Barkai; Jessica Jeffers; Ezra Karger; Ekaterina Volkova
  16. Organizational Responses to Product Cycles By Achyuta Adhvaryu; Vittorio Bassi; Anant Nyshadham; Jorge A. Tamayo; Nicolas Torres
  17. "Invisible Killer": Seasonal Allergies and Accidents By Akesaka, Mika; Shigeoka, Hitoshi
  18. Why Hours Worked Decline Less after Technology Shocks? By Olivier Cardi; Romain Restout
  19. Gender Gaps in Time Use and Entrepreneurship By Pedro Bento; Lin Shao; Faisal Sohail
  20. Do Public Sector Employment Reductions Promote Informality? By Antonis Adam; Thomas Moutos

  1. By: Battisti, Michele (University of Glasgow); Michaels, Ryan (Federal Reserve Bank of Philadelphia); Park, Choonsung (Korea Institute of Finance)
    Abstract: There is substantial variation in working time even within employer-employee matches, and yet estimates of the Frisch elasticity of labor supply can be near zero. This paper proposes a tractable theory of earnings and working time to interpret these observations. Production complementarities attenuate the response of working time to idiosyncratic, or worker-specific, shocks, but firm-wide shocks are mediated by preference parameters. The model can be identified using firm-worker matched data, revealing a Frisch elasticity of around 0.5. A quasi-experimental approach that exploits only idiosyncratic variation would find an elasticity less than half this.
    Keywords: labour supply, production complementarities, Frisch elasticity
    JEL: J22 J31
    Date: 2023–08
  2. By: Wulff Pabilonia, Sabrina; Vernon, Victoria
    Abstract: Remote wage employment gradually increased in the United States during the four decades prior to the pandemic, then surged in 2020 due to social distancing policies implemented to stem the spread of COVID-19. Using the 2010-2021 American Community Survey, the authors examine trends in wage and hours differentials for full-time remote workers and office-based workers as well as within occupation differences in wage growth by work location. Throughout the period, remote workers earned higher wages than those working on-site, and the difference increased sharply during the pandemic. Real wages grew 4.4 percent faster for remote workers within detailed occupation groups and remote work intensity was positively associated with wage growth across occupations. Before the pandemic, remote workers worked substantially longer hours per week than on-site workers, but by 2021, hours were similar.
    Keywords: remote work, working from home, wages, usual hours worked, COVID-19
    JEL: J20 J22 J31
    Date: 2023
  3. By: Stefania Albanesi (University of Pittsburgh, NBER and CEPR); António Dias da Silva (European Central Bank); Juan F. Jimeno (Banco de España, Universidad de Alcalá, CEMFI, CEPR and IZA); Ana Lamo (European Central Bank); Alena Wabitsch (University of Oxford)
    Abstract: We examine the link between labour market developments and new technologies such as artificial intelligence (AI) and software in 16 European countries over the period 2011-2019. Using data for occupations at the 3-digit level in Europe, we find that on average employment shares have increased in occupations more exposed to AI. This is particularly the case for occupations with a relatively higher proportion of younger and skilled workers. This evidence is in line with the Skill-Biased Technological Change theory. While there is heterogeneity across countries, very few countries show a decline in the employment shares of occupations more exposed to AI-enabled automation. Country heterogeneity for this result appears to be linked to the pace of technology diffusion and education, but also to the level of product market regulation (competition) and employment protection laws. In contrast to the findings for employment, we find little evidence for any correlation between wages and potential exposures to new technologies.
    Keywords: artificial intelligence, employment, skills, occupations
    JEL: J23 O33
    Date: 2023–08
  4. By: Conzelmann, Johnathan G. (University of North Carolina, Chapel Hill); Hemelt, Steven W. (University of North Carolina, Chapel Hill); Hershbein, Brad J. (Upjohn Institute for Employment Research); Martin, Shawn (University of Michigan); Simon, Andrew (University of Chicago); Stange, Kevin (University of Michigan)
    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.
    Keywords: labor demand, skill demand, college major, educational investment
    JEL: J23 J24 I23
    Date: 2023–08
  5. By: Korfhage, Thorben; Fischer-Weckemann, Björn
    Abstract: We estimate a dynamic structural model of labor supply, retirement, and informal care supply, incorporating labor market frictions and the German tax and benefit system. We find that in the absence of Germany's public long-term insurance scheme, informal elderly care has adverse and persistent effects on labor market outcomes and, thus, negatively affects lifetime earnings and future pension benefits. These consequences of caregiving are heterogeneous and depend on age, previous earnings, and institutional regulations. Policy simulations suggest that public long-term care insurance policies are fiscally costly and induce negative labor market effects. But we also show that they can offset the personal costs of caregiving to a large extent and increase welfare for those providing care, especially for low-income individuals.
    Keywords: long-term care, informal care, long-term care insurance, labor supply, retirement, pension benefits, dynamic structural model
    JEL: I18 I38 J14 J22 J26
    Date: 2023
  6. By: Morchio, Iacopo (University of Bristol); Moser, Christian (Columbia University)
    Abstract: Using linked employer-employee data from Brazil, we document a large gender pay gap due to women working at lower-paying employers with better nonpay attributes. To interpret these facts, we develop an equilibrium search model with endogenous firm pay, amenities, and hiring. We provide a constructive proof of identification of all model parameters. The estimated model suggests that amenities are important for both men and women, that compensating differentials explain half of the gender pay gap, and that there are significant output and welfare gains from eliminating gender differences. However, equal-treatment policies fail to achieve those gains.
    Keywords: wage inequality, amenities, equilibrium search model, linked employer-employee data, compensating differentials, taste-based discrimination, monopsony power
    JEL: E24 J16 J31 J32
    Date: 2023–08
  7. 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 highpremium firms and high-skilled workers.
    Keywords: Industry wage differentials; AKM models; mover design
    JEL: J31 J62
    Date: 2023–08
  8. By: Pedro S. Martins; Antonio P. Melo
    Abstract: The subdued wage growth observed in many countries has spurred interest in monopsony views of regional labour markets. This study measures the extent and robustness of employer power and its wage implications exploiting comprehensive matched employer-employee data. We find average (employment-weighted) Herfindhal indices of 800 to 1, 100, stable over the 1986-2019 period covered, and that typically less than 9% of workers are exposed to concentration levels thought to raise market power concerns. When controlling for both worker and firm heterogeneity and instrumenting for concentration, we find that wages are negatively affected by employer concentration, with elasticities of around -1.4%. We also find that several methodological choices can change significantly both the measurement of concentration and its wage effects.
    Keywords: Oligopsony, Wages, Regional labour markets, Worker mobility, Portugal
    JEL: J42 J31 J63
    Date: 2023
  9. By: Keller, Wolfgang (University of Colorado, Boulder); Utar, Hale (Grinnell College)
    Abstract: We employ employer-employee matched data from Denmark and utilize plausibly exogenous variation in the rise of import competition due to the dismantling of import quotas as China entered the World Trade Organization to show, first, that rising import competition has led to reduced employment in mid-wage occupations compensated by an increased likelihood of employment in both low-wage and high-wage occupations. Workers with higher education are more likely to move from mid- to high-wage occupations due to trade compared to moving from mid- to low-wage occupations. Employing task content information of detailed occupations, we also show that workers performing manual tasks are the ones most affected by import competition independently of the routine-task intensity of occupations. This implies that the effect of import competition is distinct from that of routine task-replacing technological change
    Keywords: job polarization, employer-employee matched data, import competition, job trajectories of individual workers, trade, technology, task, China, Denmark
    JEL: F14 F16 F66 J23 J24 J62
    Date: 2023–08
  10. By: Keith Finlay; Matthew Gross; Carl Lieberman; Elizabeth Luh; Michael G. Mueller-Smith
    Abstract: We estimate the impact of financial sanctions in the U.S. criminal justice system using nine distinct natural experiments across five states. These regression discontinuity designs capture a range of enforcement levels ($17–$6, 000) and institutional environments, providing robust causal evidence and external validity. We leverage survey and administrative data to consider a variety of short and long-term outcomes including employment, recidivism, household expenditures, spousal spillovers, and other self-reported measures of well-being. We find consistent, robust evidence of precise null effects on the population, including ruling out long-run impacts larger than -$347–$168 in annual earnings and -0.002–0.01 in annual convictions.
    JEL: H72 J24 K42
    Date: 2023–08
  11. By: Hart, Robert A. (University of Stirling); Roberts, J. Elizabeth (University of Stirling)
    Abstract: Group 1 metal and chemical industries formed the essential suppliers of British war materials during WW2. Their industrial sectors covered metal manufacture, general and electrical engineering, vehicle production, aircraft production, shipbuilding, metal goods, chemicals and explosives, and scientific instruments. Due mainly to almost 4 million men joining the armed forces, acute labour shortages necessitated women's recruited in large numbers. Women workers accounted for 16% of total Group 1 employment in 1939 rising to a peak of 37% in 1943. We use Ministry of Labour statistics on total annual numbers of female and male employees between 1937 and 1960. We examine in detail women's recruitment, training, skill growth as well as firms' radical changes to production methodologies to accommodate lower average women's skills. We compare female and male employment during the wartime transition period 1944 to 1947, followed by the period 1948 to 1960. Explanations are given for the decline and rise of female fortunes in the two periods. The employment data allow us to compare women's war-time and peace-time activities at industrial section-levels - e.g. repair of aircraft, iron and steel melting, explosives manufacture. The analysis includes wartime metal working data of the Engineering Employers' Federation (EEF). This allows us to widen our analysis. Among other features we use (1) female/male pay differentials to proxy the growth of women's skill attainments, and (2) differentiate between piecework and timework to compare employment advantages of incentivised payments contracts versus fixed short-run wage contracts.
    Keywords: women workers, Group 1 industries, skill acquisition, pay differentials
    JEL: J16 J24 J31 N44
    Date: 2023–08
  12. By: Ekpeyong, Paul
    Abstract: This study investigates the intricate interplay between gender pay gap and employment choices, specifically focusing on the distinctions between the private and public sectors. Employing a comprehensive dataset spanning various industries and professions, we employ an array of analytical methods to uncover the nuanced factors contributing to observed wage disparities between men and women, by employing Blinder decomposition analysis, this research reveals the presence of gender-based wage disparities in both private and public sectors. However, when accounting for selection bias inherent in employment choices, the dynamics of the gender wage gap shift, underlining the significance of considering the role of employment decisions. This study delves into the explained and unexplained components of the wage gap. Surprisingly, corrected results showcase women out earning their male counterparts in the private sector. This unexpected finding highlights the importance of analyzing employment choices for a comprehensive understanding of gender-based wage disparities. In addition to Blinder decomposition, we undertake an estimation of the conditional wage gap, shedding light on how the wage gap evolves over different percentiles of the wage distribution. This multifaceted approach provides deeper insights into the complexities of gender pay discrepancies. Moreover, the study employs multinomial Logit regression analysis to explore the influence of various factors on the employment choices between private and public sectors. By considering variables such as education, experience, and industry, we unveil the intricate determinants impacting individuals' decisions, contributing to the overall gender wage gap. The research's robustness is validated through the application of the Ramsey Reset test, confirming the integrity of the regression model. This study's contribution lies in its comprehensive analysis, combining Blinder decomposition, conditional wage gap estimation, and multinomial Logit regression to offer a holistic understanding of gender pay gap dynamics and employment choices. The findings have implications for policy formulation and future research aiming to create a more equitable labor market.
    Keywords: public, private, multinomial, logit, blinder decomposition, private, public
    JEL: J0 J08 J3 J7 J71
    Date: 2023–07–19
  13. By: Fraumeni, Barbara M. (Central University of Finance and Economics)
    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.
    Keywords: labor, education, employment, human capital, Asia
    JEL: I21 J16 J21 J24 O53
    Date: 2023–08
  14. By: Roussille, Nina (MIT); Scuderi, Benjamin (UC Berkeley)
    Abstract: We develop a procedure for adjudicating between models of firm wage-setting conduct. Using data on workers' choice sets and decisions over real jobs from a U.S. job search platform, we first estimate workers' rankings over firms' non-wage amenities. We document three key findings: 1) On average, workers are willing to accept 12.3% lower salaries for a 1-S.D. improvement in amenities. 2) Between-worker preference dispersion is equally large, indicating that preferences are not well-described by a single ranking. 3) High-paying firms have better amenities. Following the modern IO literature, we use these estimates to formulate a test of conduct based on exclusion restrictions. Oligopsonistic models incorporating strategic interactions between firms and tailoring of wage offers to workers' outside options are rejected in favor of simpler monopsonistic models featuring near-uniform markdowns. Misspecification has meaningful consequences: while our preferred model predicts average markdowns of 19.5%, others predict average markdowns as large as 26.6%.
    Keywords: wage-setting conduct, markdowns, monopsony
    JEL: J31 J42 L21
    Date: 2023–07
  15. By: Tania Babina; Simcha Barkai; Jessica Jeffers; Ezra Karger; Ekaterina Volkova
    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.
    JEL: E24 J21 K21 L4 L40
    Date: 2023–08
  16. By: Achyuta Adhvaryu; Vittorio Bassi; Anant Nyshadham; Jorge A. Tamayo; Nicolas Torres
    Abstract: We use daily administrative data from a leading automobile manufacturer to study the organizational impacts of introducing new models to the auto assembly line. We first show that costly defects per vehicle spike when new models are introduced. As a response, the firm trains in problem-solving skills and promotes lower- and mid-level employees to solve the more complex problems that arise, thus moving to a less pyramidal knowledge hierarchy with fewer layers. We develop an extension to the classic theory of knowledge-based hierarchies that reconciles our novel empirical results by allowing the firm to also invest in its training resources.
    JEL: D22 M12 M53 O3
    Date: 2023–08
  17. By: Akesaka, Mika (Kobe University); Shigeoka, Hitoshi (Simon Fraser University)
    Abstract: Although at least 400 million people suffer from seasonal allergies worldwide, the adverse effects of pollen on "non-health" outcomes, such as cognition and productivity, are relatively understudied. Using ambulance archives from Japan, we demonstrate that high pollen days are associated with increased accidents and injuries— one of the most extreme consequences of cognitive impairment. We find some evidence of avoidance behavior in buying allergy products but limited evidence in curtailing outdoor activity, implying that the cognitive risk of pollen exposure is discounted. Our results call for governmental efforts to raise public awareness of the risks and promote widespread behavioral change.
    Keywords: seasonal allergies, pollen, accidents, cognition, avoidance behaviors, adaptation, climate change
    JEL: I12 J24 Q51 Q53 Q54
    Date: 2023–08
  18. By: Olivier Cardi; Romain Restout
    Abstract: The contractionary effect of aggregate technology shocks on hours worked has shrunk over time in OECD countries. Our estimates suggest that this finding can be attributed to the increasing share of the variance of technology improvements driven by asymmetric technology shocks across sectors. While technology improvements uniformly distributed across sectors are found empirically to give rise to a dramatic decline in total hours worked, asymmetric technology shocks do the opposite. By depreciating non-traded prices, symmetric technology shocks generate a contractionary effect on non-traded labor and thus on total hours. In contrast, by appreciating non-traded prices, technological change concentrated toward traded industries puts upward pressure on wages which has a strong expansionary effect on total hours worked. A two-sector open economy model with frictions into the movements of inputs can reproduce the time-increasing response of both total and sectoral hours worked we estimate empirically once we allow for factor-biased technological change and we let the share of asymmetric technology shocks increase over time. A model with endogenous technology decisions reveals that two-third of the progression of asymmetric technology shocks is driven by greater exposition of traded industries to the international stock of knowledge.
    Keywords: ector-biased technology shocks, Endogenous technological change, Factor-augmenting efficiency, Open economy, Labor reallocation, CES production function, Labor income share
    JEL: E25 E62 F11 F41 O33
    Date: 2023
  19. By: Pedro Bento (Texas A&M University, Department of Economics); Lin Shao (Bank of Canada); Faisal Sohail (University of Melbourne, Department of Economics)
    Abstract: The prevalence of entrepreneurs, particularly low-productivity non-employers, declines as economies develop. This decline is more pronounced for women. Relative to men, they are more likely to be entrepreneurs in poor economies but less likely in rich economies. We investigate whether gender gaps in time dedicated to non-market activities, which narrow with development, can account for this pattern. We develop a quantitative framework in which selection into occupations depends on one's ability and time, and features gender-specific distortions and social norms around market work. When calibrated to match cross-country data, we find that differences in social norms are almost entirely responsible for the patterns of gender gaps in both time use and entrepreneurship. Through these channels, social norms account for a substantial part of cross-country differences in output per worker and firm size, and have significant welfare implications for women.
    Keywords: entrepreneurship, time use, gender, development, firm size.
    JEL: J2 L2 O1
    Date: 2023–09–01
  20. By: Antonis Adam; Thomas Moutos
    Abstract: Using information from all IMF conditionality programs from 1990 to 2018, we implement a dynamic Augmented Inverse Probability Weighting Regression Adjustment approach to examine the effects of programs, including public sector dismissals, on the size of the shadow economy. The estimated effect five years after the policy intervention indicates an increase in the share of the shadow economy to GDP by about 1.3 percentage points. More importantly, this change involves a sizable reallocation of private economic activity from its formal to its informal part, i.e., the size of the formal private sector relative to the size of the informal sector decreases by seven percentage points. We interpret these findings through the lens of a two-sector model in which there is interdependence between worker incomes and the allocation of product demand across the formal and informal sectors.
    Keywords: shadow economy, public sector employment, IMF programs, informality
    JEL: O17 J45
    Date: 2023

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