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on Labor Markets - Supply, Demand, and Wages |
| By: | Bertram, Justus; Ruhnke, Carsten S.; Schöndube, Jens Robert |
| Abstract: | As a new work style remote work has become an increasingly important factor for firms and their employees. Employees potentially benefit from a higher flexibility when working remotely. Firms can make use of this non-financial benefit to increase their attractiveness on the job market and to substitute financial wage payments to the employees. However, working remotely offers chances for the employees to engage in unproductive activities at the cost of productive working time. Hence, firms need to trade off the benefits against the costs in order to decide which degree of remote work is optimal. We use an agency model to examine the optimal degree of remote work and its interaction with the optimal incentive rate. Higher uncertainty in the productive outcome or higher risk aversion of the employee leads to both a lower degree of remote work and a lower incentive rate, while the effect of the employee's productivity on the degree of remote work is ambiguous. If pay-performance sensitivity is sufficiently high, an increase in the employee's productivity leads to a decrease in the degree of remote work, whereas it is the other way around for a low pay-performance sensitivity. In addition, we find that the optimal degree of remote work increases in the employee's preferred degree of remote work. While in the first-best solution the optimal degree of remote work is always higher than the preferred degree, in the second-best solution it can be higher or lower. |
| Keywords: | Remote Work, New Work Style, Agency Theory, Multi-Task Problem |
| JEL: | C02 D82 D83 J21 J22 J24 J33 L23 M51 M52 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-718&r=lma |
| By: | Bastani, Spencer (IFAU - Institute for Evaluation of Labour Market and Education Policy); Blumkin, Tomer (Department of Economics, Ben Gurion University of the Negev); Micheletto, Luca (Department of Law, University of Milan, and Dondena Centre for Research on Social Dynamics and Public Policy, Bocconi University) |
| Abstract: | This paper studies optimal taxation of income and education when employers cannot observe workers’ productivity and workers signal their productivity to firms by choosing both quantity and quality of education. We characterize constrained efficient allocations and derive conditions under which there is predistribution, i.e., redistribution through wage compression. Implementation through income and education dependent taxes is discussed, as well as education mandates. A key insight is that achieving predistribution requires complementing the income tax with additional policy instruments that regulate the flow of information in the labor market and prevent high skilled individuals from separating themselves from their low-skilled counterparts. |
| Keywords: | nonlinear taxation; education; asymmetric information; human capital; predistribution |
| JEL: | D82 H21 H52 J31 |
| Date: | 2024–03–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2024_008&r=lma |
| By: | Ekaterina Prytkova (Côte d’Azur University and University of Sussex); Fabien Petit (Centre for Education Policy and Equalising Opportunities, UCL); Deyu Li (Utrecht University); Sugat Chaturvedi (Ahmedabad University); Tommaso Ciarli (United Nations University, UNU-MERIT and University of Sussex, SPRU) |
| Abstract: | This paper measures the exposure of industries and occupations to 40 digital technologies that emerged over the past decade and estimates their impact on European employment. Using a novel approach that leverages sentence transformers, we calculate exposure scores based on the semantic similarity between patents and ISCO-08/NACERev.2 classifications to construct an open–access database, `TechXposure'. By combining our data with a shift–share approach, we instrument the regional exposure to emerging digital technologies to estimate their employment impact across European regions. We find an overall positive effect of emerging digital technologies on employment, with a one-standard deviation increase in regional exposure leading to a 1.069 percentage point increase in the employment-to-population ratio. However, upon examining the individual effects of these technologies, we find that smart agriculture, the internet of things, industrial and mobile robots, digital advertising, mobile payment, electronic messaging, cloud storage, social network technologies, and machine learning negatively impact regional employment. |
| Keywords: | Occupation Exposure; Industry Exposure; Text as Data; Natural Language Processing; Sentence Transformers; Emerging Digital Technologies; Automation; Employment |
| JEL: | C81 O31 O33 O34 J24 O52 R23 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:ucl:cepeow:24-01&r=lma |
| By: | Jani-Petteri Olllikainen; Tuomas Pekkarinen; Roope Uusitalo; Hanna Virtanen |
| Abstract: | We exploit admission cutoffs to secondary schools to study the effects of general academically oriented, versus vocational secondary schooling on cognitive and non-cognitive skills using a regression discontinuity design. We measure these skills using the Finnish Defence Forces Basic Skills Test that due to compulsory military service covers the vast majority of Finnish men and is a strong predictor of later labor market success. We find that large differences in average skills across students that differ in their schooling when entering military service are due to selection rather than causal effects of secondary schooling on either cognitive or non-cognitive skills. |
| Keywords: | non-cognitive skills, regression discontinuity, secondary schooling |
| JEL: | J24 I21 |
| URL: | http://d.repec.org/n?u=RePEc:pst:wpaper:336&r=lma |
| By: | Rachel Scarfe; Daniel Schaefer; Thomas Sulka |
| Abstract: | We examine who bears the costs of mandated workplace pension programs, exploiting the quasi-experimental rollout of automatic enrollment in the UK. Total compensation (take-home pay plus employer contributions) increases, driven by employer contributions, while the amount of take-home pay decreases. These effects differ by employer size, with take-home pay declining to an extent in the largest firms that we can rule out a pass-through to employees of more than 47%, significantly less than in smaller firms. Our findings provide the first evidence that large employers shift the cost of mandated automatic enrollment onto employees. |
| Keywords: | Employer-sponsored retirement savings; Incentive design; Mandated benefits; Staggered difference-in-differences |
| JEL: | D21 H22 J32 J38 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2024-02&r=lma |
| By: | Florencia Jaccoud; Fabien Petit; Tommaso Ciarli; Maria Savona |
| Abstract: | This paper examines the labor market implications of investment in automation over the life cycle of ICT and robot technologies from 1995 to 2017 in 163 European regions. We first identify major technological breakthroughs during this period for these automation technologies and identify the phases of acceleration and deceleration in investment. We then examine how exposure to these automation technologies affects employment and wages across these different phases of their life cycle. We find that the negligible long term impact of automation on employment conceals significant short term positive and negative effects within phases of the technology life cycle. We also find that the negative impact of ICT investment on employment is driven by the phase of the cycle when investment decelerates (and the technology is more mature). The phases of the technology life cycles are more relevant than differences in regions’ structural characteristics, such as productivity and sector specialization in explaining the impact of automation on regional employment. |
| Keywords: | automation, technology life cycle, employment, wages, ICT, robot |
| JEL: | J21 O33 J31 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10987&r=lma |
| By: | Jonas Radbruch; Amelie Schiprowski |
| Abstract: | Interviewing is a decisive stage of most processes that match candidates to firms and organizations. This paper studies how and why a candidate’s interview outcome depends on the other candidates interviewed by the same evaluator. We use large-scale data from high-stakes admission and hiring processes, where candidates are quasi-randomly assigned to evaluators and time slots. We find that the individual assessment decreases as the quality of other candidates assigned to the same evaluator increases. The influence of the previous candidate stands out, leading to a negative autocorrelation in evaluators’ votes of up to 40% and distorting final admission and hiring decisions. Our findings are in line with a contrast effect model where evaluators form a benchmark through associative recall. We assess potential changes in the design of interview processes to mitigate contrasting against the previous candidate. |
| Keywords: | interviews, hiring, contrast effect, memory |
| JEL: | D91 J20 M51 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10957&r=lma |
| By: | Duryea, Suzanne; Martínez, Claudia; Smith, Raimundo |
| Abstract: | We study the effects of a new 1% employment quota enacted in Chile in 2018 using anonymized administrative data on monthly employer-employee linkages and disability certification records. Our firm-level difference-in-difference results show a 15-20% increase in the number of people with disabilities working in eligible firms after the quota. About a third of the employment effects occur through the relabeling of existing workers as workers with disabilities, and the remainder through new hires. There are no negative effects found for the firms or other workers. We also conducted an experiment in quota-eligible firms to study if firms can be nudged to employ people with disabilities (PwD) by sending letters containing different information. We find that the pure information treatment increased the number of PwD working in the firms and that most of this impact is explained by an increase in the reclassification of incumbent workers. While not transformational for the labor market, inclusion of PwD, quotas and nudges do have an effect. |
| Keywords: | Disability;Disability employment quota;Affirmative ac-tion;Difference-inDifference;RCT |
| JEL: | J14 J71 J78 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:13375&r=lma |
| By: | Ohto Kanninen; Sanni Kiviholma; Tuomo Virkola |
| Abstract: | Anonymous hiring restricts the information set available to hiring managers and can create a trade-off between discrimination and hiring efficiency. To study this potential trade-off, we leverage a pilot by the City of Helsinki during which hiring to some but not all job titles were subject to anonymization. We find a positive effect on hiring applicants with foreign names but no effect on job duration or wages. Announcing anonymous hiring increases job applications but this is not driven by applicants with foreign-sounding names. Instead, we observe more women applying. We find evidence that once hiring managers are allowed to opt in to anonymous hiring (vs mandated), this induces self-selection which could have important consequences for the effectiveness of the policy and explain why our results differ from some previous research. Results suggest that anonymization can work as an effective tool to fight against discrimination at least when it is not an opt-in policy. |
| Keywords: | anonymous applications, discrimination, employment |
| JEL: | J71 |
| URL: | http://d.repec.org/n?u=RePEc:pst:wpaper:338&r=lma |
| By: | N. Meltem Daysal; William N. Evans; Mikkel Hasse Pedersen; Mircea Trandafir |
| Abstract: | We investigate the effects of radiation therapy on the mortality and economic outcomes of breast cancer patients. We implement a 2SLS strategy within a difference-in-difference framework exploiting variation in treatment stemming from a medical guideline change in Denmark. Using administrative data, we reproduce results from an RCT showing the lifesaving benefits of radiotherapy. We then show therapy also has economic returns: ten years after diagnosis, treatment increases employment by 37% and earnings by 45%. Mortality and economic results are driven by results for more educated women, indicating that equalizing access to treatment may not be sufficient to reduce health inequalities. |
| Keywords: | breast cancer, medical treatments, employment, mortality |
| JEL: | I10 I14 I18 J20 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10962&r=lma |
| By: | Torres, Javier; Beverinotti, Javier; Canavire-Bacarreza, Gustavo |
| Abstract: | In a span of six years, the proportion of Venezuelans in Peru has surged nearly fourfold, rising from virtually zero to over 4% of the population. This study delves into the dynamics of medium- and long-term labor market integration in Peru, combining data from the Venezuelan Population Residing in Peru Survey and the Peruvian National Household Survey. Our findings reveal that Venezuelan workers experience low returns on foreign postsecondary education and there is minimal relation between foreign work experience and monthly income. Importantly, these outcomes remain consistent irrespective of the time spent in the host country, indicating a gradual economic assimilation process. Lastly, our estimation demonstrates that if Venezuelans human capital yielded returns equivalent to Peruvian human capital, the average income of Venezuelans would witness a substantial increase of 20%. |
| Keywords: | Immigration;Economic Assimilation;Wage Discount |
| JEL: | J15 J24 J31 J70 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:13361&r=lma |
| By: | Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw); Oliver Reiter (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | This paper analyses changes in the speed of labour demand for new hires in response to the lockdowns that were repeatedly put in place to contain the spread of the COVID-19 pandemic. It tests whether the uncertainty-reducing effect of similar lockdowns occurring in quick succession increased the responsiveness of the labour market, thereby allowing for more rapid adjustment, both at the beginning and at the end of subsequent lockdowns. It uses high-frequency online job-posting data and applies an event study approach to the beginning of three national lockdowns and the subsequent reopening in Austria between 2020 and 2022. In view of the importance of progress in vaccination for labour market recovery, it also looks at vaccine roll-out as an additional COVID-19 containment measure, with 2021 as the main roll-out period. The results indicate very different responses to the three lockdowns, with a decline in job-posting activity of between 47% and 50% during the first lockdown and of between 29% and 31% during the second; but an increase of 23% to 28% during the last lockdown. Moreover, responses to the first lockdown were sluggish, with a slow decline at the beginning and a very slow recovery after it was lifted; but over subsequent lockdowns the responses were more rapid and more symmetrical. Responses to the various events differed by occupation and industry the strongest responses were to be observed in the highly skilled and more-teleworkable occupations of technicians, and managers and professionals, who were badly affected during the first lockdown; the leisure and hospitality industry, which was the hardest hit on account of the mandatory closures and the widespread travel restrictions and bans, and which recovered only very slowly; and the IT, internet and telecommunications industry, where posting activity developed in a direction opposite to that seen in the other industries. Finally, there is little robust evidence of a differentiated effect of vaccinations during lockdowns, suggesting that vaccination roll-out did not have an additional demand-generating effect, over and above the lockdowns. |
| Keywords: | online job posting, COVID-19, teleworkability, vaccinations, event study analysis |
| JEL: | J23 J63 O33 G14 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:wii:wpaper:243&r=lma |
| By: | Florencia Jaccoud (UNU-MERIT, United Nations University); Fabien Petit (Centre for Education Policy and Equalising Opportunities, UCL); Tommaso Ciarli (United Nations University, UNU-MERIT and University of Sussex, SPRU); Maria Savona (University of Sussex, SPRU) |
| Abstract: | This paper examines the labor market implications of investment in automation over the life cycle of ICT and robot technologies from 1995 to 2017 in 163 European regions. We first identify major technological breakthroughs during this period and classify phases of acceleration and deceleration in investment. We then examine how exposure to automation technologies affects employment and wages across these different phases of their life cycle. We find that the negligible long-term impact of automation on employment conceals significant short-term positive and negative effects within phases of the technology life cycle. We also find that the negative impact of ICT investments on employment is driven by the phase of the cycle when investment decelerates (and the technology is more mature). The phases of the technology life cycles are more relevant than differences in regions' structural characteristics, such as productivity and sector specialization in explaining the impact of automation to on regional employment. |
| Keywords: | Automation; Technology Life Cycle; Employment; Wages; ICT; Robot; |
| JEL: | J21 O33 J31 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:ucl:cepeow:24-02&r=lma |
| By: | KAMBAYASHI Ryo; TANAKA Satoshi; YAMAGUCHI Shintaro |
| Abstract: | Using firm employer-employee matched data, we document changes in wage inequality in Japan from 1995 to 2013. We find that between-firm logwage variance rose and led to the rise in the overall logwage variance for male full-time workers, while within-firm logwage variance remain unchanged. The rise of between-firm variance is driven by changes in returns based on firms’ technology and other characteristics, firm fixed effects, and the entry and exit of firms. By contrast, changes in the distribution of observed firm characteristics and returns to human capital had little effect on the between-firm logwage variance. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:24032&r=lma |
| By: | Keisuke Kondo (Research Institute of Economy, Trade and Industry and Research Institute for Economics and Business Administration, Kobe University, JAPAN) |
| Abstract: | This study bridges the gap between the urban wage premium and human capital externalities. Merging the worker-level microdata with the geographical data in Mexico and taking the two-step approach of the Mincer wage equation, this study finds that the spatial sorting and human capital externalities entirely explain the urban wage premium in Mexico. This study finds heterogeneous effects of human capital externalities on wages between high- and low-skilled workers. Low-skilled workers benefit from human capital externalities, whereas high-skilled workers do not. Instead, high-skilled workers get more than twice as high private return to education anywhere they work as low-skilled workers. |
| Keywords: | Urban wage premium; Human capital externalities; Spatial sorting; Social returns to education |
| JEL: | J31 R12 R23 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2024-09&r=lma |
| By: | Moisson, Paul-Henri |
| Abstract: | How do individuals behave in a society that rewards "merit", despite not being all on the same starting line? Does inequality in head starts make meritocracy undesirable?Attempting to answer these questions, this paper develops a model of career concerns in which agents publicly choose among several activities in which to exert e˙ort, and di˙er along a privately observable characteristic ("head start") that a˙ects their performance. The agents’ audience values talent, effort and head start. We highlight two contrasting effects: a displacement effect by which the "poor" (head start-wise) try to avoid a lower talent image and thus avoid the activity chosen by the "rich", and a distinction effect by which the rich try to reap a higher head-start image and thus avoid the activity chosen by the poor. While displacement drags the poor towards activities with lower incentives on effort, distinction pulls the rich towards activities with higher incentives. Interpreting the model in terms of "meritocracy", we emphasize how the dominance of displacement or distinction can cause well-meaning policy interventions to backfire, and make meritocracy desirable or not. |
| Keywords: | Meritocracy; inequality; image concerns; displacement; distinction |
| JEL: | D2 D6 H2 J24 M5 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:129192&r=lma |
| By: | Verena Löffler |
| Abstract: | The debate on the effects of child care policies on household and individual behavior is substantial but lacks a discussion of the unintended consequences of rising wages in the child care work sector. To address this gap in the debate, the relation between rising pay and formal child care hours, informal child care hours, and employment hours is analyzed empirically with a case study on child care in Germany between 2012 and 2019. Among other findings, the evidence demonstrates that the consumption of formal child care hours of middle- and high-income households in eastern Germany correlates negatively with child care work wages, indicating price elasticity. |
| Keywords: | care work wage, early childhood education and care, informal child care, employment hours |
| JEL: | J13 J22 J38 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp1205&r=lma |
| By: | Kuhls, Sonia |
| Abstract: | This paper examines the potential of the foundational economy as an industrial policy strategy for addressing the challenges posed by the socio-ecological transformation. Grounded in Marxist and feminist theories, the analysis sets out to deconstruct the jobs-versus-environment dilemma, revealing that dignified employment and climate mitigation are jointly imperiled by the capitalist mode of production. Nonetheless, ambitious environmental policies will necessitate structural economic changes and hence labor reallocations. In this context, the paper seeks to establish links between the foundational economy concept - which is primarily concerned with economic development and industrial policy - and sustainability research. I contend that the foundational economy emerges as a promising avenue for addressing potential adverse effects of the socio-ecological transformation for two main reasons. First, it serves as a practical guide for necessary labor reallocations, proposing the absorption of workers into low-carbon, welfare-oriented sectors. Second, it functions as a discursive strategy that directly engages with workers'self-perception and concerns, prioritizing community health and offering socially sustainable and meaningful employment. Despite these merits, the paper underscores the need for the foundational economy to address feminist critiques of labor and unpaid social reproduction to fully unlock its transformative potential. Additionally, the role of trade unions in supporting and shaping the foundational economy warrants further investigation, urging future research to delineate the positionality and strategies of trade unionsin the consolidation of this economic approach. |
| Keywords: | employment, foundational economy, industrial policy, social reproduction, socio-ecological transformation, trade unions |
| JEL: | B51 B54 J21 J51 L52 Q56 Q57 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ipewps:285376&r=lma |