nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2023‒10‒09
nineteen papers chosen by
Joseph Marchand, University of Alberta

  1. Remote Work, Wages, and Hours Worked in the United States By Pabilonia, Sabrina Wulff; Vernon, Victoria
  2. Overeducation, Performance Pay and Wages: Evidence from Germany By Baktash, Mehrzad B.
  3. Working More for Less: Part-time Penalties Across the Working Hours Distribution? By Tom Günther; Ulrich C. Schneider; Fabian Stürmer-Heiber
  4. Graying and Staying on the Job: The Welfare Implications of Employment Protection for Older Workers By Morris, Todd; Dostie, Benoit
  5. Wage and Earnings Inequality Between and Within Occupations: The Role of Labor Supply By Andrés Erosa; Luisa Fuster; Gueorgui Kambourov; Richard Rogerson
  6. The Impact of High Temperatures on Performance in Work-Related Activities By Picchio, Matteo; van Ours, Jan C.
  7. The Limits of Educational Attainment in Mitigating Occupational Segregation Between Black and White Workers By Ashley Jardina; Peter Q. Blair; Justin Heck; Papia Debroy
  8. Allocative Skill By Andrew Caplin; David J. Deming; Søren Leth-Petersen; Ben Weidmann
  9. Failing Just Fine: Assessing Careers of Venture Capital-backed Entrepreneurs via a Non-Wage Measure By Graham J. Abbott; Natee Amornsiripanitch; Paul Gompers; George Hu; Will Levinson; Vladimir Mukharlyamov
  10. Gender-science Implicit Association and Employment Decisions By Francesca Gioia; Giovanni Immordino
  11. Automation and Polarization By Daron Acemoglu; Jonas Loebbing
  12. The Micro-Foundations of Employment Systems: An Empirical Case Study of Britain and France By Amossé, Thomas; Bryson, Alex; Forth, John; Petit, Héloïse
  13. Gender Differences in Returns to Beauty By Kimberly Scharf; Oleksandr Talavera; Linh Vi
  14. Labor Supply Response to Windfall Gains By Dimitris Georgarakos; Tullio Jappelli; Geoff Kenny; Luigi Pistaferri
  15. Declining business dynamism in Europe: The role of shocks, market power, and technology By Biondi, Filippo; Inferrera, Sergio; Mertens, Matthias; Miranda, Javier
  16. Supporting Women’s Livelihoods at Scale: Evidence from a Nationwide Multi-Faceted Program By Ioana Botea; Andrew Brudevold-Newman; Markus Goldstein; Corinne Low; Gareth Roberts
  17. Contexts of Convenience: Generalizing from Published Evaluations of School Finance Policies By Danielle V. Handel; Eric A. Hanushek
  18. Prison Labor: The Price of Prisons and the Lasting Effects of Incarceration By Belinda Archibong; Nonso Obikili
  19. Heterogeneous Treatment Effect of Retirement on Cognitive Function By Koryu Sato; Haruko Noguchi; Kosuke Inoue

  1. By: Pabilonia, Sabrina Wulff (U.S. Bureau of Labor Statistics); Vernon, Victoria (Empire State College)
    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: 2023–09
  2. By: Baktash, Mehrzad B.
    Abstract: Overeducated workers are more productive and have higher wages in comparison to their adequately educated coworkers in the same jobs. However, they face a series of challenges in the labor market, including lower wages in comparison to their similarly educated peers who are in correctly matched jobs. Yet, less consensus exists over the adjustment mechanisms to overcome the negative consequences of overeducation. This study examines the hypotheses that overeducated workers sort into performance pay jobs as an adjustment mechanism and that performance pay moderates their wages. Using German Socio-Economic Panel, I show that overeducation associates with a higher likelihood of sorting into performance pay jobs and that performance pay moderates the wages of overeducated workers positively. It also holds in endogenous switching regressions accounting for the potential endogeneity of performance pay. Importantly, the positive role of performance pay is particularly larger for the wages of overeducated women.
    Keywords: Performance Pay, Overeducation, Wages, Educational Mismatch, Sorting
    JEL: I21 J24 J31 J33 M52
    Date: 2023
  3. By: Tom Günther; Ulrich C. Schneider; Fabian Stürmer-Heiber
    Abstract: We use German administrative and survey data to investigate the heterogeneity of part-time penalties in hourly wages and growth rates. Exploiting tax reforms for identification, we find substantial heterogeneity in part-time wage penalties from −28.3% to −7.2% compared to full-time. The heterogeneity in wage growth penalties is less pronounced. Both penalties do not decrease linearly with additional working hours. More weekly working hours might result in a higher hourly wage penalty. The shape of the penalties is driven by workers with non-demanding tasks and professions where working around 30 weekly hours is uncommon, and relatively many females work.
    Keywords: part-time employment, wage dynamics, female labor supply
    JEL: J16 J24 J31
    Date: 2023–09–15
  4. By: Morris, Todd (HEC Montreal); Dostie, Benoit (HEC Montreal)
    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: 2023–09
  5. By: Andrés Erosa; Luisa Fuster; Gueorgui Kambourov; Richard Rogerson
    Abstract: We document systematic differences in wage and earnings inequality between and within occupations and show that these differences are intimately related to systematic differences in labor supply across occupations. We then develop a variant of a Roy model in which earnings are a non-linear function of hours, with the extent of this non-linearity differing across occupations. In our theory, the interplay between heterogeneity in tastes for leisure and occupational differences in non-linearities affects the sorting of workers. Moreover, this interplay is crucial to account for the facts on the distributions of hours, wages, and earnings within and across occupations.
    JEL: E20 J2 J3
    Date: 2023–09
  6. By: Picchio, Matteo (Università Politecnica delle Marche, Ancona); van Ours, Jan C. (Erasmus University Rotterdam)
    Abstract: High temperatures can have a negative effect on work-related activities. Labor productivity may go down because mental health or physical health is worse when it is too warm. Workers may experience difficulties concentrating or they have to reduce effort in order to cope with heat. We investigate how temperature affects performance of male professional tennis players. We use data about outdoor singles matches from 2003 until 2021. Our identification strategy relies on the plausible exogeneity of short-term daily temperature variations in a given tournament from the average temperature over the same tournament. We find that performance significantly decreases with ambient temperature. The magnitude of the temperature effect is age-specific and skill-specific. Older and less-skilled players suffer more from high temperatures than younger and more skilled players do. The effect of temperature on performance is smaller when there is more at stake. Our findings also suggest that there is adaptation to high temperatures: the effects are smaller if the heat lasts for several days.
    Keywords: climate change, temperatures, tennis; performance, productivity
    JEL: J24 J81 Q51 Q54
    Date: 2023–09
  7. By: Ashley Jardina; Peter Q. Blair; Justin Heck; Papia Debroy
    Abstract: Past work has documented significant occupational segregation between Black and white workers in the U.S. labor force. Little work, however, has examined racial occupational segregation in recent years or by levels of education and then at the intersection of education and race. In this paper, we contribute to this literature by calculating a dissimilarity index to examine racial occupational segregation between 1980 and 2019, comparing Black and white workers with and without bachelor’s degrees and by developing a Monte Carlo simulation, where we compare the observed levels of segregation to predicted levels of racial occupational segregation by education under race-neutral conditions. First, we find that considerable racial occupation segregation in the labor market persists today regardless of educational attainment and that observed segregation is substantially higher than would be expected at random, conditional on educational attainment, gender, and geography. We compare the types of occupations in which Black and white workers are disproportionately situated, and we show that this segregation has significant consequences for wage inequality between Black and white workers with and without four-year degrees. Overall, our results show that racial occupational desegregation has stalled in the past two decades despite rising educational attainment amongst Black workers.
    JEL: J22 J24 J7
    Date: 2023–08
  8. By: Andrew Caplin; David J. Deming; Søren Leth-Petersen; Ben Weidmann
    Abstract: Jobs increasingly require good decision-making. Workers are valued not only for how much they can do, but also for their ability to decide what to do. In this paper we develop a theory and measurement paradigm for assessing individual variation in the ability to make good decisions about resource allocation, which we call allocative skill. We begin with a model where agents strategically acquire information about factor productivity under time and effort constraints. Conditional on such constraints, agents’ allocative skill can be defined as the marginal product of their attention. We test our model in a field survey where participants act as managers assigning fictional workers with heterogeneous productivity schedules to job tasks and are paid in proportion to output. Allocative skill strongly predicts full-time labor earnings, even conditional on IQ, numeracy, and education, and the return to allocative skill is greater in decision-intensive occupations.
    JEL: D8 J24
    Date: 2023–09
  9. By: Graham J. Abbott; Natee Amornsiripanitch; Paul Gompers; George Hu; Will Levinson; Vladimir Mukharlyamov
    Abstract: This paper proposes a non-pecuniary measure of career achievement: seniority. Based on a database of over 130 million resumes, this metric exploits the variation in how long it takes to attain job titles. When non-monetary factors influence career choice, assessing career attainment via non-wage measures, such as seniority, has significant advantages. Accordingly, we use our seniority measure to study labor market outcomes of VC-backed entrepreneurs. Would-be founders experience accelerated career trajectories prior to founding, significantly outperforming graduates from same-tier colleges with similar first jobs. After exiting their start-ups, they obtain jobs about three years more senior than their peers who hold (i) same-tier college degrees, (ii) similar first jobs, and (iii) similar jobs immediately prior to founding their company. Even failed founders find jobs with higher seniority than those attained by their non-founder peers.
    Keywords: career progression; entrepreneurship; venture capital
    JEL: G00 J00 J3 J30 J31 J44 J6 J63
    Date: 2023–08–28
  10. By: Francesca Gioia (Università degli Studi di Milano); Giovanni Immordino (Università di Napoli Federico II and CSEF)
    Abstract: In this paper, we document that implicit associations, measured by the gender-science implicit association test, explain employment decisions, both in terms of access to the labour market and in terms of career advancement. In both cases, when choosing between a female and a male worker with the same ex-ante ability, the higher the male-science implicit association of the employer, the higher her/his likelihood of hiring/promoting a male intentionally and the lower her/his likelihood of leaving the decision to chance. Increasing the incentives to employers does not vary the effect of implicit gender-science association which is also not heterogeneous by gender, age or income earned.
    Keywords: Gender, Labor discrimination, Implicit Association.
    JEL: J16 J24
    Date: 2023–09–11
  11. By: Daron Acemoglu (MIT); Jonas Loebbing (LMU Munich)
    Abstract: We develop an assignment model of automation. Each of a continuum of tasks of variable complexity is assigned to either capital or one of a continuum of labor skills. We characterize conditions for interior automation, whereby tasks of intermediate complexity are assigned to capital. Interior automation arises when the most skilled workers have a comparative advantage in the most complex tasks relative to capital, and because the wages of the least skilled workers are sufficiently low relative to their productivity and the effective cost of capital in low-complexity tasks. Minimum wages and other sources of higher wages at the bottom make interior automation less likely. Starting with interior automation, a reduction in the cost of capital (or an increase in capital productivity) causes employment and wage polarization. Specifically, further automation pushes workers into tasks at the lower and upper ends of the task distribution. It also monotonically increases the skill premium above a skill threshold and reduces the skill premium below this threshold. Moreover, automation tends to reduce the real wage of workers with comparative advantage profiles close to that of capital. We show that large enough increases in capital productivity ultimately induce a transition to low-skill automation and qualitatively alter the effects of automation - thereafter inducing monotone increases in skill premia rather than wage polarization.
    Keywords: assignment; automation; inequality; polarization; tasks; wages;
    JEL: J23 J31 O33
    Date: 2023–08–31
  12. By: Amossé, Thomas (CNAM, Paris); Bryson, Alex (University College London); Forth, John (Cass Business School); Petit, Héloïse (CNAM, Paris)
    Abstract: Building on existing studies of national employment systems, we take a multi-dimensional approach to comparative employment relations where the national level remains meaningful but which emphasises within-country dynamics and heterogeneity. Analysing nationally representative workplace surveys for France and Great Britain we contrast the British model characterised by variability and heterogeneity with a French model characterised by stability and uniformity. We discuss ways in which these systems are shaped by differences in employer and employee networks, the financial and organisational links between firms, and other macro-institutions.
    Keywords: employment relations, survey, national models, employment regimes
    JEL: J21 J31 M51 P52
    Date: 2023–09
  13. By: Kimberly Scharf (University of Nottingham); Oleksandr Talavera (University of Birmingham); Linh Vi (Aston University)
    Abstract: We employ a sample of nearly 40, 000 gender-targeted online job vacancies in Vietnam from February 2019 to July 2020 to investigate gender differences in returns to physical attractiveness. In particular, we compare the monthly offered wage in matched vacancies with and without beauty preferences of the same characteristics among job ads directed at men and women separately. We find evidence that better-looking women enjoy a wage premium of 3.7 percentage points, whereas better-looking men do not. Further analysis shows that the gender differences in returns to beauty are mainly driven by gender role attitudes and the perceived lack of fit rather than productivity-enhancing effect or employers' negligence in job postings.
    Keywords: FinTech; physical attractiveness, online vacancies, gender, beauty premium
    JEL: J16 J23 J24 J71
    Date: 2023–09
  14. By: Dimitris Georgarakos (European Central Bank and University of Glasgow); Tullio Jappelli (Università di Napoli Federico II, CSEF, and CEPR); Geoff Kenny (European Central Bank); Luigi Pistaferri (Stanford University, SIEPR, NBER and CEPR)
    Abstract: Using a large survey of euro area consumers, we design an experiment in which respondents report how they would change the decision to participate in the labor market, the hours worked, and their search effort (if not employed) in response to randomly assigned windfall gain scenarios. Windfall gains reduce labor supply, but only if they are significant in size. At the extensive margin, we find no effect for gains below €25, 000, and a decline in the probability of working of 3 percentage points for gains between €25, 000 and €100, 000. At the intensive margin, there is no effect for small gains, and a drop of roughly one weekly hour for gains above €50, 000. Women and workers closer to retirement respond more strongly to windfall gains. Finally, the proportion of those who stop searching for a job or search less intensively falls by 1 percentage point for each €10, 000 gain, and the effect is more pronounced for older individuals receiving the largest prize.
    Keywords: Survey Experiment; Labor Supply; Job Search; Wealth Shocks; Consumer Expectations Survey.
    JEL: E24 D10 J22 J68
    Date: 2023–09–18
  15. By: Biondi, Filippo; Inferrera, Sergio; Mertens, Matthias; Miranda, Javier
    Abstract: We study the changing patterns of business dynamism in Europe after 2000 using novel micro-aggregated data that we collect for 19 European countries. In all of them, we document a decline in job reallocation rates that concerns most economic sectors. This is mainly driven by dynamics within sectors, size classes, and age classes rather than by compositional changes. Large and mature firms show the strongest decline in job reallocation rates. Simultaneously, the shares of employment and sales of young firms decline. Consistent with US evidence, firms' employment changes have become less responsive to productivity. However, the dispersion of firms' productivity shocks has decreased too. To enhance our understanding of these patterns, we derive a firm-level framework that relates changes in firms' productivity, market power, and technology to job reallocation and firms' responsiveness.
    Keywords: business dynamism, European cross-country data, market power, productivity, responsiveness of labor demand
    JEL: D24 J21 J23 J42 L11 L25
    Date: 2023
  16. By: Ioana Botea; Andrew Brudevold-Newman; Markus Goldstein; Corinne Low; Gareth Roberts
    Abstract: The success of multi-faceted “graduation” programs at reducing poverty raises three questions: can the impacts of these programs be maintained when implemented by governments at scale, will positive effects be offset by negative spillovers, and can bundled programs be streamlined without losing im- pact? We find that a nationwide livelihood program implemented by the government of Zambia yielded consumption and earnings increases comparable to graduation programs, without negative economic spillovers on non-beneficiaries. However, the effects were entirely driven by the asset transfer portion of the bundled intervention, indicating a streamlined package could be a promising poverty alleviation strategy for developing-country governments.
    JEL: H53 I15 I38 J22 O12
    Date: 2023–08
  17. By: Danielle V. Handel; Eric A. Hanushek
    Abstract: Recent attention to the causal identification of spending impacts provides improved estimates of spending outcomes in a variety of circumstances, but the estimates are substantially different across studies. Half of the variation in estimated funding impact on test scores and over three-quarters of the variation of impacts on school attainment reflect differences in the true parameters across study contexts. Unfortunately, inability to describe the circumstances underlying effective school spending impedes any attempts to generalize from the extant results to new policy situations. The evidence indicates that how funds are used is crucial to the outcomes but such factors as targeting of funds or court interventions fail to explain the existing pattern of results.
    JEL: H4 I22 J24
    Date: 2023–09
  18. By: Belinda Archibong; Nonso Obikili
    Abstract: Institutions of justice, like prisons, can be used to serve economic and other extrajudicial interests, with lasting deleterious effects. We study the effects on incarceration when prisoners are primarily used as a source of labor using evidence from British colonial Nigeria. We digitized 65 years of archival records on prisons from 1920 to 1995 and provide new estimates on the value of colonial prison labor and the effects of labor demand shocks on incarceration. We find that prison labor was economically valuable to the colonial regime, making up a significant share of colonial public works expenditure. Positive economic shocks increased incarceration rates over the colonial period. This result is reversed in the postcolonial period, where prison labor is not a notable feature of state public finance. We document a significant reduction in present-day trust in legal institutions, such as the police, in areas with high historical exposure to colonial imprisonment; the resulting reduction in trust is specific to legal institutions.
    JEL: H5 J47 N37 O10 O43
    Date: 2023–08
  19. By: Koryu Sato (Department of Social Epidemiology, Graduate School of Medicine and School of Public Health, Kyoto University); Haruko Noguchi (Faculty of Political Science and Economics, Waseda University); Kosuke Inoue (the Hakubi Project, Department of Social Epidemiology, Graduate School of Medicine and School of Public Health, Kyoto University)
    Abstract: This study used instrumental variable causal forests to explore the heterogeneous treatment effect of retirement on cognitive function using data from 19 countries. We found that, on average, retirees have better cognitive function than workers and that the conditional average treatment effects vary depending on individuals’ characteristics. Policymakers should provide early retirement options in the pension system to allow individuals to decide when to retire. The balance between the social benefits of raising the state pension age and the individual costs of increasing the risk of dementia by delaying retirement should be considered.
    JEL: I10 J26 C26
    Date: 2023–09

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