nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2023‒10‒23
twenty-two papers chosen by
Joseph Marchand, University of Alberta

  1. The Evolution of Work from Home By Jose Maria Barrero; Nicholas Bloom; Steven J. Davis
  2. The Labor Market Consequences of Heat Exposure During Pregnancy By Xuwen Gao; Ran Song; Christopher Timmins; Fang Xia
  3. How Do Health Insurance Costs Affect Firm Labor Composition and Technology Investment? By Janet Gao; Shan Ge; Lawrence D. W. Schmidt; Cristina Tello-Trillo
  4. Inequality of Opportunity in Wealth: Levels, Trends, and Drivers By Daniel Graeber; Viola Hilbert; Johannes König
  5. The effects of deferred action for childhood arrivals on labor market outcomes. By Tran, Nhan
  6. Large-Scale Education Reform in General Equilibrium: Regression Discontinuity Evidence from India - Comment By Roodman, David
  7. The Gender Dimension of Industrial Diversification: What is the Role of Skills Gap? By Duygu Buyukyazici; ;
  8. Wages and labour relations in the Middle Ages: it's not (all) about the money By Claridge, Jordan; Delabastita, Vincent; Gibbs, Spike
  9. Reluctant Entrepreneurs: Evidence from China’s SOE Reform By Hanming Fang; Ming Li; Zenan Wu; Yapei Zhang
  10. Estimating the Effects of Government Spending Through the Production Network By Alessandro Barattieri; Matteo Cacciatore; Nora Traum
  11. Gender gaps and the role of female bosses: evidence from matched employer-employee administrative data By Rodrigo Ceni; Estefanía Galván; Cecilia Parada
  12. Low-wage jobs, foreign-born workers, and firm performance By Catalina Amuedo-Dorantes; Esther Arenas-Arroyo; Parag Mahajan; Bernhard Schmidpeter
  13. Two possible reasons behind the reluctance of low-skilled workers to migrate to generous welfare states By Łukasz Byra
  14. Agglomeration and human capital: an extended spatial Mankiw-Romer-Weil model for European regions By Alicia Gómez-Tello; María-José Murgui-García; María-Teresa Sanchis-Llopis
  15. Much Ado about Salary: A Comparison of Monetary and Non-Monetary Components of Job Satisfaction By Cristina Bernini; Alessandro Tampieri
  16. Informality, Labor Market Dynamics, and Business Cycles in North Africa By Olivier Bizimana; Shant Arzoumanian
  17. The Impacts of Racial Differences in Economic Challenges on Housing, Wealth, and Economic Security Among OASI Beneficiaries By Francis Wong; Kate Pennington; Amir Kermani
  18. Job Amenities in the Market for CEOs By Arnaud Dupuy; John Kennes; Ran Sun Lyng
  19. The decline of manufacturing employment and the rise of the far-right in Austria By Karim Bekhtiar
  20. Knowledge Transfers from Multinational to Domestic Firms: Evidence from Worker Mobility – A Replication-Robustness Study of Poole (2013) By Stefanie A. Haller; Eoin T. Flaherty; Ragnhild Balsvik; Stefanie Haller
  21. Mixed-Effects Methods For Search and Matching Research By John M. Abowd; Kevin L. McKinney
  22. Teacher Licensing, Teacher Supply, and Student Achievement: Nationwide Implementation of edTPA By Bobby W. Chung; Jian Zou

  1. By: Jose Maria Barrero; Nicholas Bloom; Steven J. Davis
    Abstract: Full days worked at home account for 28 percent of paid workdays among Americans 20-64 years old, as of mid 2023, according to the Survey of Working Arrangements and Attitudes. That’s about four times the 2019 rate and ten times the rate in the mid-1990s that we estimate in time-use data. We first explain why the big shift to work from home has endured rather than reverting to pre-pandemic levels. We then consider how work-from-home rates vary by worker age, sex, education, parental status, industry and local population density, and why it is higher in the United States than other countries. We also discuss some implications of the big shift for pay, productivity, and the pace of innovation. Over the next five years, U.S. business executives anticipate modest increases in the share of fully remote jobs at their own companies and in the share of jobs with hybrid arrangements, whereby the employee splits the workweek between home and employer premises. Other factors that portend an enduring shift to work from home include the ongoing adaptation of managerial practices and further advances in technologies, products, and tools that support remote work.
    JEL: D13 D23 E24 J22 J31 M54 R3
    Date: 2023–09
  2. By: Xuwen Gao; Ran Song; Christopher Timmins; Fang Xia
    Abstract: We provide the first estimates of the negative impact of exposure to extremely high temperatures during pregnancy on mothers’ labor market outcomes. We employ individual-level survey data from China and leverage plausibly exogenous fluctuations in heat exposure within cities. The results demonstrate that exposure to extremely hot weather during pregnancy reduces women’s wages and labor supply later in life and increases the likelihood that they will work in an unskilled sector. The effects are stronger for heat exposure during the third gestational trimester. The mechanism for these results is that extreme temperature exposure during pregnancy undermines maternal health. Our analysis proposes a new channel through which extreme weather generates health and economic costs.
    JEL: I10 J22 J31 Q54
    Date: 2023–09
  3. By: Janet Gao; Shan Ge; Lawrence D. W. Schmidt; Cristina Tello-Trillo
    Abstract: Employer-sponsored health insurance is a significant component of labor costs. We examine the causal effect of health insurance premiums on firms’ employment, both in terms of quantity and composition, and their technology investment decisions. To address endogeneity concerns, we instrument for insurance premiums using idiosyncratic variation in insurers’ recent losses, which is plausibly exogenous to their customers who are employers. Using Census microdata, we show that following an increase in premiums, firms reduce employment. Relative to higher-income coworkers, lower-income workers see a larger increase in their likelihood of being separated from their jobs and becoming unemployed. Firms also invest more in information technology, potentially to substitute labor.
    Keywords: Health insurance, insurer losses, worker skills, firm employment, labor composition, inequality, technology investment, automation
    JEL: G22 G31 G28 G18 J01 J08 J32 J22 J23
    Date: 2023–09
  4. By: Daniel Graeber (DIW Berlin, IZA Bonn, CEPA); Viola Hilbert (DIW Berlin, BSE); Johannes König (DIW Berlin, BSE)
    Abstract: While inequality of opportunity (IOp) in earnings is well studied, the literature on IOp in individual net wealth is scarce to non-existent. This is problematic because both theoretical and empirical evidence show that the position in the wealth and income distribution can significantly diverge.We measure ex-ante IOp in net wealth for Germany using data from the Socio-Economic Panel (SOEP). Ex-ante IOp is defined as the contribution of circumstances to the inequality in net wealth before effort is exerted. The SOEP allows for a direct mapping from individual circumstances to individual net wealth and for a detailed decomposition of net wealth inequality into a variety of circumstances; among them childhood background, intergenerational transfers, and regional characteristics. The ratio of inequality of opportunity to total inequality is stable from 2002 to 2019. This is in sharp contrast to labor earnings, where ex-ante IOp is declining over time. Our estimates suggest that about 62% of the inequality in net wealth is due to circumstances. The most important circumstances are intergenerational transfers, parental occupation, and the region of birth. In contrast, gender and individuals’ own education are the most important circumstances for earnings.
    Keywords: inequality, wealth, inequality of opportunity, decomposition
    JEL: D63 J62 D31 J24
    Date: 2023–10
  5. By: Tran, Nhan
    Abstract: I study the effects of the Deferred Action for Childhood Arrivals program (DACA) on labor market outcomes among potentially eligible immigrants. DACA allowed undocumented immigrants to participate in the labor market without fear of deportation, which might be expected to increase the probability of working and allowing workers to move to higher-skilled occupations. However, using a regression discontinuity design, I find very little to no effects on the probability of working and the likelihood of working in high skilled jobs among DACA-eligible immigrants. The confidence intervals permit modest effects on these variables, but rule out large ones. Overall, my results suggest that temporary legal status had limited effects for DACA-eligible individuals.
    Keywords: DACA, undocumented immigrants, labor market outcomes
    JEL: J01 J1 J15 J2 J24
    Date: 2023–09–06
  6. By: Roodman, David
    Abstract: This paper reanalyzes Khanna (2023), which studies labor market effects of schooling in India through regression discontinuity designs. Absent from the data are four dis-tricts close to the discontinuity; restoring them cuts the reduced-form impacts on schooling and log wages by 57% and 63%. Using regression-specific optimal band-widths and a robust variance estimator clustered at the geographic unit of treatment makes impacts statistically indistinguishable from 0. That finding is robust to varying the identifying threshold and the bandwidth. The estimates of general equilibrium effects and elasticities of substitution are not unbiased and have effectively infinite first and second moments.
    Date: 2023
  7. By: Duygu Buyukyazici; ;
    Abstract: Regional capabilities are considered the primary source of the industrial diversification process. Even so, the existing practice is somewhat reluctant to observe their exact nature. The present study explores one important dimension of regional capabilities, namely the gender gap in workplace skills, and considers it in accounting for the observed patterns of industrial diversification of regions. By constructing a gender skill gap indicator at the industry-region level, female-biased and male-biased skill gaps are analysed. The descriptive and empirical analyses document significant variations of the gender skill gaps across industries and regions. By employing piecewise logistic models, the study unfolds the contrasting impacts of the female-biased and male-biased skill gaps on the industrial diversification of regions.
    Keywords: Regional Capabilities; Gender; Diversification; Skill Gap; Industries
    JEL: J24 O18 R10 R23
    Date: 2023–09
  8. By: Claridge, Jordan; Delabastita, Vincent; Gibbs, Spike
    Abstract: For long periods of history, a significant proportion of the labour force has received all or part of their wages in non-monetary in-kind payments. Despite its historical ubiquity, this form of labour remuneration remains poorly understood. This paper presents a framework which allows for the valuation and interpretation of in-kind wages. We apply our method to a new dataset of agricultural wages for labourers in medieval England (1270-1440), most of whom received a composite wage for which in-kind payment was the largest share. Assessing the market value of the wages these workers received, we find an increase in the relative importance of cash payments in the latter decades of the 14th century. We show that this was connected to a fundamental shift in labour relations, providing new empirical insights into the so-called ‘golden age of labour’ that followed the Black Death.
    Keywords: labour markets; labour relations; medieval economy; wages
    JEL: J33 J42 N33 N53
    Date: 2023–09–01
  9. By: Hanming Fang; Ming Li; Zenan Wu; Yapei Zhang
    Abstract: We study the impact of state-owned enterprises (SOEs) on the quality of entrepreneurship in China. Using long series of firm registration and performance data, we document that the massive SOE downsizing in the late 1990s significantly improved the quality of entrepreneur- ship. Compared with entrepreneurs in other time periods, firms founded by the reluctant entrepreneurs induced by the SOE layoffs have better performances. To explain these results, we present a simple model of occupational choices where high-skilled individuals obtain a higher value than low-skilled individuals from the benefits offered by SOE jobs, leading them to select into the SOE sector in the pre SOE reform era. When the SOE sector was downsized, some high-skilled SOE employees were reluctantly unleashed into entrepreneurship. We also provide corroborating evidence for other implications of the model.
    JEL: J08 J28 J68 L26
    Date: 2023–09
  10. By: Alessandro Barattieri; Matteo Cacciatore; Nora Traum
    Abstract: We estimate the effects of government spending along the supply chain using disaggregated U.S. government procurement data. We first identify sectoral public spending shocks and combine them with input-output tables to measure upstream and downstream exposure through the production network. We then estimate panel local projections and find that sector-specific government purchases have sizable effects both in industries that receive procurement contracts and industries across the supply chain. Employment increases significantly in recipient industries and in sectors supplying intermediate inputs to these industries, while employment decreases downstream. The response of prices and wages suggest higher intermediate-input demand by recipient industries translates into higher intermediate-input prices across the network, accounting for the crowding out of downstream employment. We then estimate the aggregate implications of sectoral shocks and the influence of sectoral heterogeneity using a granular instrumental variable approach. Consistent with existing models, we find that aggregate effects are higher when recipient sectors are more downstream, have stickier prices, and when the government accounts for most of the recipient's total sales.
    JEL: E32 E62
    Date: 2023–09
  11. By: Rodrigo Ceni (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Estefanía Galván (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Cecilia Parada (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: While a large body of literature has focused on identifying the causes of female under-representation at hierarchical positions, we still know little about the effects of having more women with decision-making power at top positions. Using matched employer-employee administrative data for Uruguay, this paper investigates how the gender composition at hierarchical positions of the firms affects the wage gaps among male and female employees. Our results show that having a higher proportion of female bosses at the firms leads to lower pay gaps. Including workers’ and bosses’ fixed effects to account for unobserved heterogeneity, we find that working in a firm with increasing participation of female bosses reduces the gender pay gap by between 1.15 and 4.27 log points. The gender pay gaps are substantially lower among civil servants compared to those of private workers, but even in these large public firms having female bosses reduces the gender wage gaps. We present suggestive evidence that gender differences in the entrance wage offered to males compared to that offered to female workers partially explain these results. Moreover, women working in public firms are between 2.9% and 4.3% more likely to be promoted when working for female bosses.
    Keywords: gender gaps, promotions, firms, bosses
    JEL: D10 J16 J22
    Date: 2023–08
  12. By: Catalina Amuedo-Dorantes; Esther Arenas-Arroyo; Parag Mahajan; Bernhard Schmidpeter (Economics, Johannes Kepler University Linz)
    Abstract: We examine how migrant workers impact firm performance using administrative data from the United States. Exploiting an unexpected change in firms' likelihood of securing low-wage workers through the H-2B visa program, we find limited crowd-out of other forms of employment and no impact on average pay at the firm. Yet, access to H-2B workers raises firms' annual revenues and survival likelihood. Our results are consistent with the notion that guest worker programs can help address labor shortages without inflicting large losses on incumbent workers.
    Keywords: guest workers, migrants, employment, firm dynamics, H-2B visa
    JEL: J23 F22 J61
    Date: 2023–09
  13. By: Łukasz Byra (University of Warsaw, Faculty of Economic Sciences)
    Abstract: This paper provides two possible explanations for the mixed evidence regarding migration by low-skilled workers to generous welfare states. Using a model of unrestricted migration to a developed, destination country, which provides a direct and equal social benefit to all its residents, we study the impact of the benefit in a country on the size of its low-skilled immigrant population under the assumption that migration is driven by an international difference in returns to skills, employment opportunities in the destination country, and by the generosity of the benefit in that country. We find that the social benefit affects the size of the country’s low-skilled immigrant population not only directly, via the difference between the benefit and its cost in the form of taxation, but also via two indirect channels. The benefit incentivizes taking up low-skilled jobs among the destination country’s native residents, which adversely affects wages of low-skilled workers in that country, and it increases the risk of unemployment of low-skilled workers therein. Prospective low-skilled migrants view these side effects of the benefit as “stay away” factors. Simulation of the model based on 2018 data for EU-15 economies without Luxembourg highlights the importance of indirect channels in curtailing the inflow of low-skilled migrants to a generous welfare state. When only direct channels are accounted for, semi-elasticities of the size of the low-skilled immigrant population with respect to the social benefit are between 0.2 and 0.54. When indirect channels are allowed to play their roles, the positive relationship between the social benefit and low-skilled immigration is significantly reduced; the semi-elasticities range from 0.13 to 0.4. At the level of the model’s fundamentals, the variation in semi-elasticities between EU-15 countries is largely explained by differences in the size of the welfare state and in efficiency of the labor market across these countries.
    Keywords: Welfare migration, Migration by low-skilled workers, Skill formation in a destination country, Unemployment in a destination country
    JEL: F22 H31 J24 J64
    Date: 2023
  14. By: Alicia Gómez-Tello (University of Valencia); María-José Murgui-García; María-Teresa Sanchis-Llopis
    Abstract: Over the last two decades a handful of very rich European regions have increased the gap separating them from the European average in terms of labour productivity. In this paper we extend a spatial version of the Mankiw, Romer and Weil model (MRW, 1992) as developed by Fischer (2011) to accommodate human capital spillovers linked to agglomeration. After modelling this specific spillover, we go on to test empirically whether its effect has been to stimulate labour productivity growth in those European regions with the greatest potential to benefit from agglomeration economies. The theoretical model leads to a cross-sectional spatial Durbin model specification. The empirical analysis is carried out for 121 European regions for the period 1995-2014. We find significant conditional b-convergence, positive impacts of investment in physical and human capital, and a negative impact of population growth. Our most notable result involves the specific spillover effect that enhances the impact of investment in human capital in the most highly agglomerated regions. We find this externality significant in explaining labour productivity growth and therefore also in increasing labour productivity disparities across European regions.
    Keywords: Human capital, labour productivity, spatial externalities, European region
    JEL: R
    Date: 2023
  15. By: Cristina Bernini; Alessandro Tampieri
    Abstract: We investigate how specific components of job satisfaction influence overall work happiness. We use the British Household Panel Survey (BHPS), which includes measures of satisfaction with total pay, job security, the nature of work, and hours worked. Our analysis employs a multi-level model to assess the variations in job satisfaction among different types of occupations. This approach allows for a clear comparison of both monetary and non-monetary aspects of job satisfaction. Our findings indicate that the importance of satisfaction with salary in explaining overall satisfaction is lower compared to other non-monetary aspects. This result holds true even when we narrow down the sample by considering factors such as gender (males or females), employment type (full-time or part-time), further job satisfaction components (available for fewer years), and examining income as a second-level factor rather than job occupation.
    Keywords: subjective well-being, happiness function, job satisfaction.
    JEL: I31 R10
    Date: 2023
  16. By: Olivier Bizimana; Shant Arzoumanian
    Abstract: Employment informality is widespread across North Africa. This paper aims to shed light on the role played by the informal sector in labor market adjustments over the business cycle. It finds that the response of labor markets to output fluctuations is more muted in countries with higher informality levels, like the North African economies. The analysis also confirms that informal employment is countercyclical and acts as a buffer during economic downturns in countries with relatively higher informality. However, contrary to what took place in past recessions, informal employment contracted sharply during the 2020 pandemic recession in high informality economies, suggesting that it did not play its traditional countercyclical role. By contrast, employment informality tends to fall modestly or increase during economic upturns, including the post-pandemic recovery. This finding presages the persistence of a large informal sector in the post-covid era in medium- and high-informality countries.
    Keywords: Informality; Labor Markets; Business cycles; Okun’s Law
    Date: 2023–09–08
  17. By: Francis Wong; Kate Pennington; Amir Kermani
    Abstract: Housing wealth comprises 40 percent of the net wealth of retirement-age Americans, 43 percent of whom have not yet paid off their mortgages. This report analyzes two research questions. First, we evaluate the extent to which Old-Age and Survivors Insurance (OASI) benefits advance economic security and racial equity among homeowners. Our use of linked administrative data facilitates a comparative analysis of economic well-being measures before and after homeowners became eligible for OASI benefits. Second, we analyze how racial disparities in job losses during working years contribute to racial differences in economic security at retirement, focusing particularly on exposure to distressed home sales. Utilizing confidential taxpayer microdata, we assess racial discrepancies in the incidence of job loss, distressed sales, and wealth destruction due to distressed sales. Our findings imply that racial/ethnic differences in wealth at retirement are at least partly attributable to differences in labor market experiences. In terms of policy implications, our findings provide support for policies that mitigate employment and income instability during working years. Such policies are likely to have effects that accumulate throughout the life cycle and can mitigate racial/ethnic differences in wealth at retirement.
    Date: 2023–09
  18. By: Arnaud Dupuy (Department of Economics and Business Economics, University of Luxembourg); John Kennes (Department of Economics and Business Economics, Aarhus University); Ran Sun Lyng (Tampere University)
    Abstract: We use a two-sided multidimensional matching model with imperfect transferable utility to estimate how CEOs/firms trade off preferred firm/CEO qualities against salary. These preferences are identifiable with data on CEO pecuniary compensation and assignment. We estimate the model with high-quality Danish data through maximum likelihood, accounting for CEO and firm fixed effects. The estimates reveal that CEOs have strong preferences for non-monetary job amenities that account for several puzzling features of the market for CEOs. The central role of CEO job preferences is also illustrated by several counterfactual experiments.
    Keywords: Job amenities, CEO compensation, Assignment Models, CEO-firm matching, Multidimensional matching
    JEL: G30 M12 G34 J32 C78 C35
    Date: 2023–09–25
  19. By: Karim Bekhtiar (Institute for Advanced Studies, Vienna)
    Abstract: In recent decades right-wing populist parties have experienced increased electoral success in many western democracies. This rise of the far-right, which is strongly built on the support of the working class, coincides with a sharp decline of the manufacturing sector. This paper analyzes the contribution of this manufacturing decline to the rise of the Austrian far-right. Overall the decline in manufacturing employment has strongly contributed to this rightward shift in the political landscape, with the manufacturing decline explaining roughly 43% of the observed increase in far-right vote-shares between 1995 and 2017. This effect is entirely driven by increases in natives unemployment rates, which increased considerably due to the manufacturing decline. Regarding the influences of the forces underlying the manufacturing decline, namely international trade and automation technologies, suggests that both forces contributed in roughly equal parts to this development
    Keywords: Manufacturing, Trade, Robots, Voting, Populism
    JEL: D72 F14 J21 J23 O14 R23
    Date: 2023–08
  20. By: Stefanie A. Haller; Eoin T. Flaherty; Ragnhild Balsvik; Stefanie Haller
    Abstract: This paper replicates Poole (2013) using comprehensive Norwegian and Irish register data. Our results largely confirm the evidence documented in Poole for Brazil which suggests that when workers leave multinationals and are rehired at domestic establishments, the wages of their new coworkers who have already been present in the plant increase. However, unlike suggested in the original article there is little indication that these spillovers differ in a statistically significant way across various dimensions of heterogeneity for any of the three countries.
    Keywords: multinational firms, wage spillovers, worker mobility, replication
    JEL: F23 F61 J31
    Date: 2023
  21. By: John M. Abowd; Kevin L. McKinney
    Abstract: We study mixed-effects methods for estimating equations containing person and firm effects. In economics such models are usually estimated using fixed-effects methods. Recent enhancements to those fixed-effects methods include corrections to the bias in estimating the covariance matrix of the person and firm effects, which we also consider.
    Keywords: mixed-effects models, generalized linear models
    JEL: J3 C5
    Date: 2023–09
  22. By: Bobby W. Chung (University of South Florida; Nanjing Audit University); Jian Zou (UIUC)
    Abstract: The recent controversial roll-out of the educative Teacher Performance Assessment (edTPA) - a performance-based exam - raises the bar of initial teacher licensure and makes teacher recruitment difficult. We leverage the quasi-experimental setting of different adoption timing by states and analyze multiple data sources containing a national sample of prospective teachers and students of new teachers in the US. With extensive controls of concurrent policies, we find that the edTPA reduced prospective teachers in undergraduate programs, less-selective and minority-concentrated universities. Contrary to the policy intention, we do not find evidence that edTPA increased student test scores.
    Keywords: teacher licensing, edTPA, occupational licensing, teacher supply
    JEL: I28 J2 J44 K31 L51
    Date: 2023–10

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