nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2023‒10‒02
seventeen papers chosen by
Joseph Marchand, University of Alberta

  1. Signaling Specific Skills and the Labor Market of College Graduates By Busso, Matias; Montaño, Sebastián; Muñoz-Morales, Juan
  2. Women in Management and the Gender Pay Gap By Virginia Sondergeld; Katharina Wrohlich
  3. Seniority By DongIk Kang; Miles S. Kimball
  4. “Invisible Killer”: Seasonal Allergies and Accidents By Mika Akesaka; Hitoshi Shigeoka
  5. Minimum wages in a dual labour market: Evidence from the 2019 minimum-wage hike in Spain By Alexander Hijzen
  6. Occupational Choice, Human Capital, and Financial Constraints By Rui Castro; Pavel Sevcik
  7. The Bright Side of Tax Evasion By Wladislaw Mill; Cornelius Schneider
  8. A Multisector Perspective on Wage Stagnation By Ngai, L. Rachel; Sevinc, Orhun
  10. Graying and staying on the job: The welfare implications of employment protection for older workers By Todd Morris; Benoit Dostie
  11. Political Sentiment and Innovation: Evidence from Patenters By Joseph Engelberg; Runjing Lu; William Mullins; Richard R. Townsend
  12. Distributional Equity in the Employment and Wage Impacts of Energy Transitions By Ben Gilbert; Hannah Gagarin; Ben Hoen
  13. Is working enough to escape poverty? Evidence on low-paid workers in Italy By Michele Bavaro; Michele Raitano
  14. Incentivizing Innovation in Open Source: Evidence from the GitHub Sponsors Program By Annamaria Conti; Vansh Gupta; Jorge Guzman; Maria P. Roche
  15. Who (Actually) Gets the Farm? Intergenerational Farm Succession in the United States By Adrian Haws; David R. Just; Joseph Price
  16. What is the role of data in jobs in the United Kingdom, Canada, and the United States?: A natural language processing approach By Julia Schmidt; Graham Pilgrim; Annabelle Mourougane
  17. Income-Based Family Typology and Child Development: Evidence from the UK By Elena Claudia Meroni; Francesca Verga

  1. By: Busso, Matias; Montaño, Sebastián; Muñoz-Morales, Juan
    Abstract: We use census-like data and a regression discontinuity design to study the labor market impacts of a signal provided by a government-sponsored award given to top-performing students on a nationwide college exit exam in Colombia. Students who can signal their high level of specific skills earn seven to ten percent more than identical students lacking such a signal. The signal allows workers to find jobs in more productive firms and sectors that better use their skills. The positive returns persist for up to five years. The signal favors workers from less advantaged groups who enter the market with weaker signals.
    Keywords: Signaling; skills; wage returns; college reputation; Colombia
    JEL: J20 J24 J31 J44 O15 D80
    Date: 2023–09
  2. By: Virginia Sondergeld; Katharina Wrohlich
    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
  3. By: DongIk Kang; Miles S. Kimball
    Abstract: This paper studies the optimal wage structure of a firm with imperfect monitoring of worker effort. We find that when firms can commit to (implicit) long-term contracts, imperfect monitoring leads to optimal wage profiles that reflect worker seniority. We provide a precise measure of seniority as a ratio of co-state variables and illustrate how this measure of seniority evolves over the worker’s tenure with the firm and how it affects wages, effort, monitoring intensity and separation rates. We also show how earnings loss from unemployment reflects seniority and how optimal monitoring intensity, amenities and on-the-job training evolve with seniority.
    JEL: J0 J31 J32
    Date: 2023–08
  4. By: Mika Akesaka; Hitoshi Shigeoka
    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 suggest that policymakers may wish to consider programs to raise public awareness of the risk and promote behavioral change.
    JEL: I12 J24 Q51 Q53 Q54
    Date: 2023–08
  5. By: Alexander Hijzen
    Abstract: This paper provides an assessment of the 2019 minimum-wage hike in Spain, which increased the minimum wage by 22% and directly concerned 7% of dependent employees. The assessment is based on an individual-level analysis that follows the outcomes of workers that were employed in the year before the reform over time. Among directly affected workers, the hike in the minimum wage increased full-time equivalent monthly earnings by on average 5.8% and reduced employment by -0.6%. The wage effects are stronger for workers on open-ended contracts, while the employment effects are stronger for workers on fixed-term contracts.
    Keywords: employment protection, fixed-term contracts, labour market duality, wage-setting, wage-shifting
    JEL: J3 J4 J8
    Date: 2023–09–18
  6. By: Rui Castro (McGill University); Pavel Sevcik (University of Quebec in Montreal)
    Abstract: We study the aggregate productivity effects of firm-level financial frictions. Credit constraints affect not only production decisions, but also household level schooling decisions. In turn, entrepreneurial schooling decisions impact firm-level productivities, whose cross-sectional distribution becomes endogenous. In anticipation of future constraints, entrepreneurs under-invest in schooling early in life. Frictions lower aggregate productivity because talent is misallocated across occupations, and capital misallocated across firms. Firm level productivities are also lower due to schooling distortions. These effects combined account for between 36 and 68 percent of the U.S.-India aggregate productivity difference. Schooling distortions are the major source of aggregate productivity differences.
    Keywords: Aggregate Productivity, Financial Frictions, Entrepreneurship, Human Capital, Misallocation
    JEL: E24 I25 J24 O11 O15 O16 O47
    Date: 2023–08
  7. By: Wladislaw Mill; Cornelius Schneider
    Abstract: This paper investigates whether tax evasion can be beneficial for an optimal income tax schedule. Past theoretical discussions have presented mixed outcomes as to whether allowing taxpayers to opt into uncertainty could indeed enhance overall tax revenues. In this study, we conducted an original real effort experiment in an online labor market with almost 1, 000 participants to test this hypothesis empirically. Our findings show significant positive labor supply responses to the opportunity to evade (increased labor supply by 37%). More importantly, the expected tax revenue significantly and substantially increased by up to more than 50%. As an example, our data suggests that a 40% tax rate with complete enforcement could be replaced with a 28% tax rate with the option of tax evasion, without any loss in tax revenue. Strikingly, this effect persists when comparing effective tax rates: Lowering effective tax rates through probabilistic enforcement (the opportunity to evade) is more efficient than simply lowering statutory tax rates. Our findings suggest that the opportunity for tax evasion can increase tax revenues beyond what a corresponding decrease in nominal rates would achieve. For welfare analyses, this highlights the importance of not only considering the elasticity of taxable income (ETI) but total earned income elasticities.
    Keywords: tax evasion, tax revenues, labor supply, optimal taxation, experiment
    JEL: H21 H24 H26 J22 C91
    Date: 2023
  8. By: Ngai, L. Rachel (London School of Economics); Sevinc, Orhun (Central Bank of Turkey)
    Abstract: Low-skilled workers are concentrated in sectors that experience fast productivity growth and yet their real wages have been stagnating. We document evidence from the U.S. to show the importance of sectoral reallocations. Key to our two-sector model is the fall in the relative price of the low-skill intensive sector caused by faster productivity growth. When outputs are complements across sectors, this leads to a reallocation of low-skilled workers to the high-skill intensive sector where their marginal product is stagnant. We show that this mechanism is quantitatively important for the stagnation of low-skill real wages and their divergence from aggregate labor productivity during 1980-2010.
    Keywords: wage stagnation, wage-productivity divergence, low-skill wage, multisector model
    JEL: E24 J23 J31
    Date: 2023–07
  9. By: Sam Desiere; Christian Walker; (-)
    Abstract: Shift work is a widespread but understudied phenomenon. This paper examines one specific aspect of shift work: the shift premium. To this end, we included a discrete choice experiment in an online survey targeted at night and shift workers. Respondents chose between a standard 9 am – 5 pm job paying €15 per hour and a job with shift work in which the wage randomly varied between €12 and €20. The results show that respondents demand sizeable shift premiums to prefer shift over daytime work, with higher premiums for more onerous working hours such as night shifts or rotating shifts. We observe substantial heterogeneity in the shift premium across respondents and provide suggestive evidence of labour market sorting.
    Keywords: shift work, shift premium, Willingness to Pay, discrete choice experiment
    JEL: C91 J31 J48
    Date: 2023–09
  10. By: Todd Morris; Benoit Dostie
    Abstract: We study the welfare implications of employment protection for older workers, exploiting recent bans on mandatory retirement across Canadian provinces. Using linked employer-employee tax data, we show that the bans cause large and similar reductions in job separation rates and retirement hazards at age 65, with further reductions at higher ages. The effects vary substantially across industries and firms, and around two-fifths of the adjustments occur between ban announcement and implementation dates. We find no evidence that the demand for older workers falls, but the welfare effects are mediated by spillovers on savings behavior, workplace injuries, and spousal retirement timing.
    Keywords: employment protection; retirement; welfare; active and passive savings responses; health effects; spousal spillovers
    JEL: J26 J78 H55
    Date: 2023
  11. By: Joseph Engelberg; Runjing Lu; William Mullins; Richard R. Townsend
    Abstract: We document political sentiment effects on US inventors. Democratic inventors are more likely to patent (relative to Republicans) after the 2008 election of Obama but less likely after the 2016 election of Trump. These effects are 2-3 times as strong among politically active partisans and are present even within firms over time. Patenting by immigrant inventors (relative to non-immigrants) also falls following Trump’s election. Finally, we show partisan concentration by technology class and firm. This concentration aggregates up to more patenting in Democrat-dominated technologies (e.g., Biotechnology) compared to Republican-dominated technologies (e.g., Weapons) following the 2008 election of Obama.
    JEL: D72 J24 M5 O31
    Date: 2023–08
  12. By: Ben Gilbert; Hannah Gagarin; Ben Hoen
    Abstract: We use restricted-access, geocoded data on the near-universe of workers in 23 U.S. states in order to quantify the impact of wind energy development on local earnings and employment, by race, ethnicity, sex, and educational attainment. We find the largest relative impacts for workers without a high school education, or workers with a college education, in addition to other systematic differences across sub-populations. We compare these results to estimates using county aggregates of the worker-level data, such as can be obtained using publicly available data. We find that (a) county-level estimates are dramatically dampened relative to geocoded worker-level estimates, and (b) the degree of bias differs by sub-population such that qualitative comparisons of impacts are not consistent using restricted-access data versus county-level data for most sub-populations. We discuss implications for achieving equity goals within energy transition policies.
    JEL: Q4 Q42 Q43 R11 R12
    Date: 2023–08
  13. By: Michele Bavaro (University of Oxford); Michele Raitano (Sapienza University of Rome)
    Abstract: We investigate the dynamics of incidence, intensity and persistence of low pay in Italy from 1990 to 2018 by exploiting a large administrative sample of employees in the private sector. We refer to various relative and absolute low pay thresholds and assess workers’ conditions according to annual earnings, weekly wages and full-time-equivalent (FTE) weekly wages, to depurate low pay dynamics from the influence of changes in worked weeks and hours. Regardless of the chosen threshold, we find that the incidence of low pay is high and steeply increased in the last decades when the focus is on annual earnings and weekly wages. A flat trend emerges instead when low pay is assessed according to FTE weekly wages, signalling that a major role in the low pay dynamics is played by the reduction in the number of hours worked by low-paid individuals because of the increasing spread of part-time contracts. Nevertheless, the share of low-paid workers is rather high even when the focus is on FTE weekly wages. Furthermore, low pay is a persistent status for a large and rising share of workers. These findings reveal a clear worsening of workers’ conditions at the bottom of the earnings distribution in Italy.
    Keywords: Low pay; Earnings; Working Poverty; Minimum wage; Italy
    JEL: J3 J6 I3
  14. By: Annamaria Conti; Vansh Gupta; Jorge Guzman; Maria P. Roche
    Abstract: Open source is key to innovation, but we know little about how to incentivize it. In this paper, we examine the impact of a program providing monetary incentives to motivate innovators to contribute to open source. The Sponsors program was introduced by GitHub in May 2019 and enabled organizations and individuals alike to reward developers for their open source work on the platform. To study this program, we collect fine-grained data on about 100, 000 GitHub users, their activities, and sponsorship events. Using a difference-in-differences approach, we document two main effects. The first is that developers who opted into the program, which does not entail receiving a financial reward, increased their output after the program's launch. The second is that the actual receipt of sponsorship has a long-lasting negative effect on innovation, as measured by new repository creation, regardless of the amount of money received. We estimate a similar decline in other community-oriented tasks, but not in coding effort. While the program’s net effect on users’ innovative output appears to be positive, our study shows that receiving an extrinsic reward may crowd out developers' intrinsic motivation, diverting their effort away from community and service-oriented activities on open source.
    JEL: J24 L86 O3 O31 O36
    Date: 2023–09
  15. By: Adrian Haws; David R. Just; Joseph Price
    Abstract: We link census records for millions of farm children to identify owner-operators of the family farm in adulthood, providing the first population-level evidence on intergenerational farm transfers. Using our panel of U.S. census data from 1900 to 1940, our analysis supports the primogeniture hypothesis that oldest sons are more likely to inherit the family farm. Daughters are rarely observed as successors. We find that the birth order relationship among sons is relatively small and is only present for the subset of families with parents who are working age when they first have a successor, indicating that they had a succession plan. In families without an early successor, adult children who are tenant farmers or are not in an urban area are more likely to later inherit their family’s farm. Tenancy and rural residence are much more predictive of succession than is birth order. Thus, unplanned succession may primarily benefit underresourced farmers. With fewer than one-fifth of farm families having a child successor, the slow growth in succession as parents reach retirement age and life expectancy suggests the importance of identifying a successor early.
    JEL: D64 J24 N32 N52 Q12 Q15
    Date: 2023–08
  16. By: Julia Schmidt; Graham Pilgrim; Annabelle Mourougane
    Abstract: This paper estimates the data intensity of occupations/sectors (i.e. the share of job postings per occupation/sector related to the production of data) using natural language processing (NLP) on job advertisements in the United Kingdom, Canada and the United States. Online job advertisement data collected by Lightcast provide timely and disaggregated insights into labour demand and skill requirements of different professions. The paper makes three major contributions. First, indicators created from the Lightcast data add to the understanding of digital skills in the labour market. Second, the results may advance the measurement of data assets in national account statistics. Third, the NLP methodology can handle up to 66 languages and can be adapted to measure concepts beyond digital skills. Results provide a ranking of data intensity across occupations, with data analytics activities contributing most to aggregate data intensity shares in all three countries. At the sectoral level, the emerging picture is more heterogeneous across countries. Differences in labour demand primarily explain those variations, with low data-intensive professions contributing most to aggregate data intensity in the United Kingdom. Estimates of investment in data, using a sum of costs approach and sectoral intensity shares, point to lower levels in the United Kingdom and Canada than in the United States.
    Keywords: Data asset, data economy, Data intensity, job advertisements, natural language processing
    JEL: C80 C88 E01 J21
    Date: 2023–09–18
  17. By: Elena Claudia Meroni; Francesca Verga
    Abstract: Our paper contributes to the literature studying how household conditions can influence children’s development, focusing on the type of family model where children grow up, defined on the basis of parental employment status and relative earnings. The traditional “male-breadwinner” model is no longer the only type of family that has been observed throughout recent decades; the “dual-breadwinner” family model is currently widespread across all developed countries and an additional household type is becoming more prevalent: the one in which the woman is the sole or main wage-earner, the so-called “female-breadwinner” arrangement. How do different family models influence the development of children’s skills? We use data from the Millennium Cohort Study (UK) to investigate the association between different typologies of families and cognitive and socio-emotional outcomes, focusing on children aged 7 and 11. We find that, compared to children growing up in male-breadwinner households, only children who have at least one parent who does not work at all are worse off in some socioemotional outcomes. Children growing up in other types of arrangements (equal earners or female-breadwinner) do not differ in their cognitive or socio-emotional outcomes.
    Keywords: Child development, female breadwinner, dual breadwinner, male breadwinner, household employment, Millennium Cohort Study
    JEL: J13 J24 D10
    Date: 2023

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