nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2024‒04‒22
nineteen papers chosen by
Joseph Marchand, University of Alberta

  1. Toward an Understanding of the Returns to Cognitive Skills Across Cohorts By Judith K. Hellerstein; Sai Luo; Sergio S. Urzúa
  2. Are we yet sick of new technologies? The unequal health effects of digitalization By Arntz, Melanie; Findeisen, Sebastian; Maurer, Stephan; Schlenker, Oliver
  3. Beauty and Professional Success: A Meta-Analysis By Kseniya Bortnikova; Tomas Havranek; Zuzana Irsova
  4. Speeding up on the learning curve: The evaluation of telework following a surge in telework experience By Eline Moens; Louis Lippens; Liam D'hert; Stijn Baert
  5. Productivity Convergence and Firm’s Training Strategy By Pardesi, Mantej
  6. Re-assessing the Spatial Mismatch Hypothesis By David Card; Jesse Rothstein; Moises Yi
  7. The Long-Run Impacts of Public Industrial Investment on Local Development and Economic Mobility: Evidence from World War II By Andrew Garin; Jonathan L. Rothbaum
  8. Does High Involvement Management Make You Work Longer? Insights from Linked Survey and Register Data By Böckerman, Petri; Bryson, Alex; Ilmakunnas, Ilari; Ilmakunnas, Pekka
  9. Staggered Contracts and Unemployment During Recessions By Effrosnyi Adamopoulou; Luis Diez-Catalan; Ernesto Villanueva
  10. Do Recruiters Penalize Men Who Prefer Low Hours? Evidence from Online Labor Market Data By Kopp, Daniel
  11. Artificial Intelligence Capital and Employment Prospects By Drydakis, Nick
  12. "Bad Jobs" in "Good Industries": The Precarious Employment of Migrant Workers in the Manufacturing Sector of the Emilia-Romagna Region By Landini, Fabio; Rinaldi, Riccardo
  13. The art of living well: Cultural participation and well-being By Fabrice Murtin
  14. Starting Up AI By Emin Dinlersoz; Can Dogan; Nikolas Zolas
  15. Ban-the-Box Laws: Fair and Effective? By Robert Kaestner; Xufei Wang
  16. Why not Choose a Better Job? Flexibility, Social Norms, and Gender Gaps in Japan By Kazuharu Yanagimoto
  17. A Minimum Wage May Increase Exports and Firm Size Even with a Competitive Labor Market By Danziger, Eliav; Danziger, Leif
  18. Birth Order and Social Outcomes, England, 1680-2024 By Gregory Clark; Neil Cummins
  19. The Long-Run Effects of Conditional Cash Transfers: the Case of Bolsa Familia in Brazil By Luis Laguinge; Leonardo Gasparini; Guido Neidhöfer

  1. By: Judith K. Hellerstein; Sai Luo; Sergio S. Urzúa
    Abstract: Recent research concludes that wage returns to cognitive skills have declined in the U.S. We reassess this finding. Using decomposition methods, we document the pivotal role played by dynamic shifts in the distributions of pre-labor market cognitive skills. Our findings show these shifts explain the declining estimated returns to cognitive skills, especially for white men. We discard measurement error as a potential driver. Although often overlooked, grappling with changing pre-labor market skill distributions is necessary for capturing the evolution of labor market returns to cognitive skills. This may prove especially important in the future given continuing changes in skill development in recent youth cohorts.
    JEL: J24 J31
    Date: 2024–03
  2. By: Arntz, Melanie; Findeisen, Sebastian; Maurer, Stephan; Schlenker, Oliver
    Abstract: This study quantifies the relationship between workplace digitalization, i.e., the increasing use of frontier technologies, and workers' health outcomes using novel and representative German linked employer-employee data. Based on changes in individual-level use of technologies between 2011 and 2019, we find that digitalization induces similar shifts into more complex and service-oriented tasks across all workers, but exacerbates health inequality between cognitive and manual workers. Unlike more mature, computer-based technologies, frontier technologies of the recent technology wave substantially lower manual workers' subjective health and increase sick leave, while leaving cognitive workers unaffected. We provide evidence that the effects are mitigated in firms that provide training and assistance in the adjustment process for workers.
    Keywords: health, inequality, technology, machines, automation, tasks, capital-labor substitution
    JEL: I14 J21 J23 J24 O33
    Date: 2024
  3. By: Kseniya Bortnikova (Charles University, Prague); Tomas Havranek (Charles University, Prague & Centre for Economic Policy Research, London & Meta-Research Innovation Center, Stanford); Zuzana Irsova (Charles University, Prague)
    Abstract: Common wisdom suggests that beauty helps in the labor market. We show that two factors combine to explain away the mean beauty premium reported in the literature. First, correcting for publication bias reduces the premium by at least a third. Second, controlling for cognitive ability negates the premium for all occupations except sex workers, a point further underscored by the similarity of the beauty effect on earnings and productivity. The second factor implies a positive link, perhaps genetic, between beauty and intelligence. We find little evidence of substantial attenuation bias that could offset publication and omitted- variable biases. The empirical literature is inconsistent with discrimination based solely on tastes for beauty. To obtain these results we collect 1, 159 estimates of the effect of beauty on earnings or productivity reported in 67 studies and codify 33 aspects that reflect estimation context, including the potential intensity of attenuation bias. We employ recently developed techniques to account for publication bias and model uncertainty.
    Keywords: energy Beauty premium, productivity, meta-analysis, model uncertainty, publication bias
    JEL: C83 J24 J31
    Date: 2024–04
  4. By: Eline Moens; Louis Lippens; Liam D'hert; Stijn Baert (-)
    Abstract: This letter adds to the literature on the importance of telework experience in employee evaluation by leveraging the telework experience accumulated during the COVID-19 crisis. We conducted a follow-up survey on the evaluation of telework exactly three years after our initial data collection in 2020. We find evidence of a learning curve regarding self-reported i) efficiency in performing tasks, ii) work-life balance, and iii) concentration during work, characterised by a more positive evaluation as telework experience increased. Migration background, feedback on the job, and compatibility of the job with telework moderate the effect of telework experience on the evaluation of telework over time.
    Keywords: Telework, learning curve, time evolution
    JEL: J24 J28 J32 J81 I31
    Date: 2024–04
  5. By: Pardesi, Mantej (ROA / Human capital in the region, RS: GSBE other - not theme-related research)
    Abstract: In this paper, I study how converging to the productivity frontier influences a firm’s training investments. Although productivity growth induces a high-skill bias in firm’s workforce structure, little is known about its training incentives for vocational and technical skills. I address endogeneity in productivity growth using a two-stage control function approach where I use productivity shocks as exogenous changes to a firm’s position in intra-industry distribution. I find that closing the gap to the frontier leads to a negative effect on firm’s investment in training in vocational skills. The negative effect is stronger for large, multi-plant, innovative and technical advanced firms. Using a model for firm sponsored training, I explain the results via a technology effect, cost of training effect and labour substitution effect. First, productivity convergence induces technology upgradation that is skill biased against vocational skills. Second, high expected costs of training augments this skill-biasedness. Third, compositional shift in workforce induces firms to demand fewer vocational and technical skills.
    JEL: J24 J42 D24 D23
    Date: 2024–04–04
  6. By: David Card; Jesse Rothstein; Moises Yi
    Abstract: We use detailed location information from the Longitudinal Employer-Household Dynamics (LEHD) database to develop new evidence on the effects of spatial mismatch on the relative earnings of Black workers in large US cities. We classify workplaces by the size of the pay premiums they offer in a two-way fixed effects model, providing a simple metric for defining “good” jobs. We show that: (a) Black workers earn nearly the same average wage premiums as whites; (b) in most cities Black workers live closer to jobs, and closer to good jobs, than do whites; (c) Black workers typically commute shorter distances than whites; and (d) people who commute further earn higher average pay premiums, but the elasticity with respect to distance traveled is slightly lower for Black workers. We conclude that geographic proximity to good jobs is unlikely to be a major source of the racial earnings gaps in major U.S. cities today.
    JEL: J31 R23
    Date: 2024–03
  7. By: Andrew Garin; Jonathan L. Rothbaum
    Abstract: This paper studies the long-run effects of government-led construction of manufacturing plants on the regions where they were built and on individuals from those regions. Specifically, we examine publicly financed plants built in dispersed locations outside of major urban centers for security reasons during the United States' industrial mobilization for World War II. Wartime plant construction had large and persistent impacts on local development, characterized by an expansion of relatively high-wage manufacturing employment throughout the postwar era. These benefits were shared by incumbent residents; we find men born before WWII in counties where plants were built earned $1, 200 (in 2020 dollars) or 2.5 percent more per year in adulthood relative to those born in counterfactual comparison regions, with larger benefits accruing to children of lower-income parents. The balance of evidence suggests that these individuals benefited primarily from the local expansion of higher-wage jobs to which they had access as adults, rather than because of developmental effects from exposure to better environments during childhood.
    JEL: H56 J31 J62 N42 R11 R53
    Date: 2024–03
  8. By: Böckerman, Petri (University of Jyväskylä); Bryson, Alex (University College London); Ilmakunnas, Ilari (Finnish Centre for Pensions); Ilmakunnas, Pekka (Aalto University)
    Abstract: The management practices employers deploy may affect the utility workers derive from their jobs, potentially affecting the types of jobs they enter and also their propensity to exit the workforce. Ours is the first paper to assess whether employers' use of high involvement management (HIM) practices may influence workers' retirement intentions. Using linked survey and register data to analyze different combinations of HIM, we find that information sharing and employer-provided training lead to intentions to retire later among those who are close to the official retirement age in Finland.
    Keywords: retirement, high involvement management, information sharing, training
    JEL: J26 J32
    Date: 2024–02
  9. By: Effrosnyi Adamopoulou; Luis Diez-Catalan; Ernesto Villanueva
    Abstract: This paper studies the impact of downward wage rigidity on wage and employment dynamics after the outbreak of major recessions in Spain. Downward wage rigidity stems from collective agreements, which set province-sector-skill specific minimum wage floors for all workers. By exploiting variation in the renewal of collective contracts, we find that agreements signed before the onset of recessions settle on higher nominal negotiated wage growth than agreements signed after. Leveraging Social Security data and the distribution of the worker-level bite of minimum wage floors, we document that the negotiated wage rigidity translated into higher wage growth mainly among workers with wages close to the floors. Consequently, these workers experienced a substantial and highly persistent increase in the probability of non-employment but only if they were covered by collective agreements of long duration. Our findings highlight the interplay between rigidity at different parts of the wage distribution and labor market institutions and identify conditions under which collective contract staggering and the inability to renegotiate may amplify aggregate shocks.
    Keywords: Employment, Job Separation, Collective Bargaining, Wage Rigidity, Staggering, Social Security Data
    JEL: J23 J31 J50
    Date: 2024–03
  10. By: Kopp, Daniel (ETH Zurich)
    Abstract: Part-time work is a popular way to reconcile work and family responsibilities. This study investigates how easy it is for men and women to get part-time jobs. To assess this question, I first analyze the hiring decisions of recruiters who screen jobseekers on an online recruiting platform and estimate contact penalties for men and women seeking part-time jobs. Second, I relate the number of hours advertised in online job postings to firms' confidentially reported gender preferences. I find that recruiters prefer full-time over part-time workers, and that part-time penalties are more pronounced for men than for women. Differences in job or workplace characteristics cannot explain these results. Instead, the preponderance of evidence points to bias due to gender stereotypes.
    Keywords: recruitment, part-time, gender equality, hiring, online labor markets
    JEL: J16 J23 M51
    Date: 2024–03
  11. By: Drydakis, Nick
    Abstract: There is limited research assessing how AI knowledge affects employment prospects. The present study defines the term 'AI capital' as a vector of knowledge, skills and capabilities related to AI technologies, which could boost individuals' productivity, employment and earnings. Subsequently, the study reports the outcomes of a genuine correspondence test in England. It was found that university graduates with AI capital, obtained through an AI business module, experienced more invitations for job interviews than graduates without AI capital. Moreover, graduates with AI capital were invited to interviews for jobs that offered higher wages than those without AI capital. Furthermore, it was found that large firms exhibited a preference for job applicants with AI capital, resulting in increased interview invitations and opportunities for higher-paying positions. The outcomes hold for both men and women. The study concludes that AI capital might be rewarded in terms of employment prospects, especially in large firms.
    Keywords: Artificial Intelligence, Artificial Intelligence Capital, Employment, Wages, Higher Education, Education
    JEL: E24 I26 O14
    Date: 2024
  12. By: Landini, Fabio; Rinaldi, Riccardo
    Abstract: The article examines the drivers of migrant atypical employment in the manufacturing sector of the Emilia-Romagna region. By drawing on administrative data based on mandatory communications we document that, even in an industry characterized by high quality of productions and occupations, migrants have a disproportionally higher likelihood to be hired through either fixed-term or agency contracts compared to natives. We interpret this evidence through a set of alternative theories, including human capital theory, dual labour market processes, the use of precarious contracts as screening devices and institutional segmentation theories. The empirical analysis reveals that while migrant employment through fixed-term contracts is consistent with screening purposes, the hiring of migrants with agency contracts is driven by processes of institutional segmentation, through which employers shift the costs of flexibility to the most vulnerable and less organized segments within the labour force, such as migrants. Managerial and policy implications are discussed.
    Keywords: job quality, migrant workers, manufacturing, nonstandard employment
    JEL: D22 J28 J41 L23
    Date: 2024
  13. By: Fabrice Murtin
    Abstract: This paper first presents a meta-analysis of the causal impact of cultural participation on well-being. The meta-analysis classifies the literature according to the strength of the evidence available and various types of cultural activities. Secondly, this paper uses data from time use surveys from Canada, France, Italy, the United Kingdom, and the United States to study individuals’ emotional responses to a series of daily activities. This is then used as a basis for an empirical assessment of the drivers of time allocation across different activities, showing that expectations of future well-being are one of the reasons why individuals decide to engage in cultural activities. Furthermore, the model helps explain why cultural participation, in spite of being one of the most enjoyable human activities, is also the least undertaken. We show that heterogeneity of preferences results in a strong selection effect in available statistics.
    Keywords: arts, cultural activities, experienced well-being, time use survey, U-index, well-being
    JEL: I31 J22 Z11 Z18
    Date: 2024–03–29
  14. By: Emin Dinlersoz; Can Dogan; Nikolas Zolas
    Abstract: Using comprehensive administrative data on business applications over the period 2004-2023, we study emerging business ideas for developing AI technologies or producing goods or services that use, integrate, or rely on AI. The annual number of new AI business applications is stable between 2004 and 2012 but begins to rise after 2012, and increases faster from 2016 onward into the pandemic, with a large, discrete jump in 2023. The distribution of AI business applications is highly uneven across states and sectors. AI business applications have a higher likelihood of becoming employer startups and higher expected initial employment compared to other business applications. Moreover, controlling for application characteristics, employer businesses originating from AI business applications exhibit higher employment, revenue, payroll, average pay per employee, and labor share, but have similar labor productivity and lower survival rate, compared to those originating from other business applications. While these early patterns may change as the diffusion of AI progresses, the rapid rise in AI business applications, combined with their generally higher rate of transition to employers and better performance in some post-transition outcomes, suggests a small but growing contribution from these applications to business dynamism.
    Date: 2024–03
  15. By: Robert Kaestner; Xufei Wang
    Abstract: Ban-the-box (BTB) laws are a widely used public policy rooted in employment law related to unnecessarily exclusionary hiring practices. BTB laws are intended to improve the employment opportunities of those with criminal backgrounds by giving them a fair chance during the hiring process. Prior research on the effectiveness of these laws in meeting their objective is limited and inconclusive. In this article, we extend the prior literature in two ways: we expand the years of analysis to a period of rapid expansion of BTB laws and we examine different types of BTB laws depending on the employers affected (e.g., public sector). Results indicate that BTB laws, any type of BTB law or BTB laws covering different types of employers, have no systematic or statistically significant association with employment of low-educated men, both young and old and across racial and ethnic groups. We speculate that the lack of effectiveness of BTB laws stems from the difficulty in enforcing such laws and already high rates of employer willingness to hire those with criminal histories.
    JEL: J71
    Date: 2024–03
  16. By: Kazuharu Yanagimoto (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: Japan ranks 116th out of 146 countries in the World Economic Forum’s Global Gender Gap Index 2022, well below many developed countries, and has one of the largest gender pay gaps among high-income countries. On the other hand, women’s labor force participation is high in Japan. However, women are much more likely to work in non-regular jobs, which are associated with lower wages and fewer hours. Men, in contrast, have regular, higher-paid jobs with long-hours requirements. In this paper, I build and estimate a model where couples jointly decide their occupations and working hours. Occupations differ in their flexibility. Regular jobs require long working hours, and hourly wages are a convex function of hours worked. Non-regular occupations have a linear mapping between hours worked and hourly wages. The model also allows for social norms that penalize women who earn more than their husbands. Given the inflexibility of regular jobs and social norms, women are more likely to choose non-regular jobs or not to work, and allocate a larger share of their hours for home production. The model can account for all of the observed gender gaps in labor force participation, 33% in occupational choices, 74% in labor hours, and 34% in wages. Through the lens of the model, the inflexibility of regular jobs explains almost all the gaps in occupational choices and wages, while social norms that penalize women who earn more than their husbands account for all of the gap in the participation rate and half of the gap in hours worked.
    Keywords: Gender wage gap, social norms, job inflexibility, home production.
    JEL: J16 J22 J31
    Date: 2024–01
  17. By: Danziger, Eliav (Simon Fraser University); Danziger, Leif (Ben Gurion University)
    Abstract: This paper explores how a minimum wage affects a firm's behavior with a competitive labor market and an uncertain export cost. The model provides several novel insights which are consistent with recent empirical evidence. Thus, a minimum wage increases an exporter's foreign-market size and may cause a non-exporter to start exporting. The foreign-market size may increase so much that, although the home-market size decreases, the overall firm size increases.
    Keywords: exports, minimum wage, firm size
    JEL: J30
    Date: 2024–03
  18. By: Gregory Clark (University of Southern Denmark, LSE); Neil Cummins (LSE)
    Abstract: Children early in the birth order get more parental care than later children. Does this significantly affect their life chances? An extensive genealogy of 428, 280 English people 1680-2024, with substantial sets of complete families, suggests that birth order had little effect on social outcomes either for contemporary outcomes, or in earlier centuries. For a small group of elite families in the nineteenth century and earlier, the oldest son was advantaged in terms of wealth, education, and occupational status. But even in this elite group, among later sons, birth order had no effect. We consider in the paper how the absence of birth order effects in England can be reconciled with reports of substantial negative birth order effects for modern Nordic countries.
    Keywords: Human Capital Formation, Birth Order, Intergenerational Mobility
    JEL: J24 J62 N33 N34
    Date: 2024–04
  19. By: Luis Laguinge (CEDLAS-IIE-FCE-UNLP & CONICET); Leonardo Gasparini (CEDLAS-IIE-FCE-UNLP & CONICET); Guido Neidhöfer (ZEW Mannheim & Turkish-German University)
    Abstract: Conditional Cash Transfers (CCTs) have become a key antipoverty policy in Latin America in the last 25 years. The ultimate goal of this kind of programs is to break the intergenerational transmission of poverty through the promotion of human capital accumulation of children in vulnerable households. In this paper, we explore this issue by estimating the long-run effects of the largest CCT in Latin America: the Brazilian Bolsa Familia. Through a combination of the two-stage-two-sample method and a difference-in-differences approach, we find evidence consistent with a positive long-run impact of Bolsa Familia among former beneficiaries. In particular, we find a significant positive effect on education and labor income, and a negative effect on the likelihood of being a current beneficiary of this social transfer.
    JEL: D04 I38 J24
    Date: 2024–04

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