nep-lma New Economics Papers
on Labor Markets - Supply, Demand, and Wages
Issue of 2024‒05‒06
seventeen papers chosen by

  1. Factory Automation, Labor Demand, and Local Labor Market By Kawaguchi, Daiji; Okazaki, Tetsuji; Zhu, Xuanli
  2. The Impact of Hiring Costs for Skilled Workers on Apprenticeship Training: A Comparative Study By Aepli, Manuel; Mühlemann, Samuel; Pfeifer, Harald; Schweri, Jürg; Wenzelmann, Felix; Wolter, Stefan C.
  3. Marginal Returns to Public Universities By Jack Mountjoy
  4. Overeducation, Overskilling and Job Satisfaction in Europe: The Moderating Role of Employment Contracts By Romina Giuliano; Benoît Mahy; François Ryckx; Guillaume Vermeylen
  5. Artificial Intelligence Capital and Employment Prospects By Drydakis, Nick
  6. From Helping Hand to Stumbling Block: The ChatGPT Paradox in Competency Experiment By Duk Gyoo Kim; Ahram Moon
  7. How Scary is the Risk of Automation? Evidence from a Large Survey Experiment By Maria A. Cattaneo; Christian Gschwendt; Stefan C. Wolter
  8. Do migrants displace native-born workers on the labour market? The impact of workers’ origin By Valentine Fays; Benoît Mahy; François Ryckx
  9. Did COVID-19 (Permanently) Raise the Demand for "Teleworkable" Jobs? By Bratti, Massimiliano; Brunetti, I.; Corvasce, A.; Maida, Agata; Ricci, Andrea
  10. Choosing and Using Information in Evaluation Decisions By Katherine B. Coffman; Scott Kostyshak; Perihan O. Saygin; Katie Coffman
  11. Consumption Dynamics and Welfare Under Non-Gaussian Earnings Risk By Fatih Guvenen; Serdar Ozkan; Rocio Madera
  12. Not in My Backyard? The Local Impact of Wind and Solar Parks in Brazil By Fabian Scheifele; David Popp
  13. Automation and Offshoring on Wage Inequality in Japan By KIKUCHI Shinnosuke
  14. The Use of Performance Appraisals and Employees' Presenteeism Behavior By Grund, Christian; Nießen, Anna
  15. A Discrimination Report Card By Patrick M. Kline; Evan K. Rose; Christopher R. Walters
  16. Heterogeneous Impacts of Trade Shocks on Workers By Patrick Arni; Peter H. Egger; Katharina Erhardt; Matthias Gubler; Philip Sauré
  17. A Tale of the Tails: The Value of a Statistical Life at the Tails of the Age Distribution By Kniesner, Thomas J.; Viscusi, W. Kip

  1. By: Kawaguchi, Daiji (University of Tokyo); Okazaki, Tetsuji (CEPR); Zhu, Xuanli (Keio University)
    Abstract: This study examines the impact of a technological change on employment and wages, focusing on the adoption of power looms in the silk-weaving industry. Exploiting plant-level panel data from 20th century Japan, we demonstrate that at the plant level, the power loom adaption increased the employment and wages of adult male workers, who likely conducted engineering tasks, and moderately increased wages of female adults, who were simultaneously displaced and reinstated to more non-routine tasks. The wage hike of adult workers induced the exit of less efficient plants and decreased female adult employment by 28 percent at the area level.
    Keywords: electrification, automation, employment, wage, second industrial revolution
    JEL: J23 J24 J31 N35
    Date: 2024–03
  2. By: Aepli, Manuel (Swiss Federal Institute for Vocational Education and Training); Mühlemann, Samuel (University of Munich); Pfeifer, Harald (BIBB); Schweri, Jürg (Swiss Federal Institute for Vocational Education and Training); Wenzelmann, Felix (BIBB); Wolter, Stefan C. (University of Bern)
    Abstract: This study analyzes the relationship between firms' costs of hiring skilled workers and their provision of internal apprenticeship training. Our empirical analysis draws on four waves of firm surveys conducted in Germany and Switzerland that include detailed information on firms' hiring costs for skilled workers and training practices. Using an indicator of labor market tightness as an instrumental variable, we identify a substantial hiring cost elasticity of apprenticeship contracts of 1.4 for Swiss firms. Although we also find a positive and increasing cost elasticity for German firms over time, its magnitude is considerably smaller. Our results are consistent with the perspective that longer-term post-training benefits are more significant in a country with frictions in the labor market and contribute to a better understanding of firms' training behavior.
    Keywords: hiring costs for skilled workers, apprenticeship training
    JEL: J23 J24 J32
    Date: 2024–04
  3. By: Jack Mountjoy
    Abstract: This paper studies the causal impacts of public universities on the outcomes of their marginally admitted students. I use administrative admission records spanning all 35 public universities in Texas, which collectively enroll 10 percent of American public university students, to systematically identify and employ decentralized cutoffs in SAT/ACT scores that generate discontinuities in admission and enrollment. The typical marginally admitted student completes an additional year of education in the four-year sector, is 12 percentage points more likely to earn a bachelor's degree, and eventually earns 5-10 percent more than their marginally rejected but otherwise identical counterpart. Marginally admitted students pay no additional tuition costs thanks to offsetting grant aid; cost-benefit calculations show internal rates of return of 19-23 percent for the marginal students themselves, 10-12 percent for society (which must pay for the additional education), and 3-4 percent for the government budget. Finally, I develop a method to disentangle separate effects for students on the extensive margin of the four-year sector versus those who would fall back to another four-year school if rejected. Substantially larger extensive margin effects drive the results.
    JEL: H43 H75 I2 I20 I22 I23 I24 I26 I28 J24 J31
    Date: 2024–04
  4. By: Romina Giuliano (UMONS (Soci&ter) and ULB (CEBRIG, DULBEA)); Benoît Mahy (UMONS (Soci&ter) and ULB (CEBRIG, DULBEA)); François Ryckx (ULB (CEBRIG, DULBEA), UMONS (Soci&ter), UCLouvain (IRES), GLO and IZA); Guillaume Vermeylen (UMONS (Soci&ter) and ULB (CEBRIG, DULBEA))
    Abstract: This paper is the first to examine whether and how overeducation and overskilling, considered separately and in interaction, influence workers’ job satisfaction at European level. It also investigates the moderating role of employment contracts. Our results, based on a unique pan-European database covering 28 countries in 2014, show that overeducation and overskilling reduce the probability of workers being satisfied with their jobs, but also that the drop in job satisfaction is almost double for genuinely overeducated workers (i.e. workers that are both overeducated and overskilled). These adverse effects on job satisfaction are found to be more pronounced among mismatched workers (whether overeducated, overskilled or both) on fixed-term rather than indefinite contracts.
    Keywords: Job Satisfaction, Overeducation, Overskilling, Labour contracts, Europe
    JEL: C21 J24 J28 J41
    Date: 2024–04–11
  5. By: Drydakis, Nick (Anglia Ruskin University)
    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: 2024–03
  6. By: Duk Gyoo Kim; Ahram Moon
    Abstract: We ran a controlled laboratory experiment to examine whether ChatGPT’s aid can increase the participants’ performance in three different—reading and writing, mathematical problem-solving, and computational thinking—tasks. We find that the math score significantly decreases with ChatGPT’s assistance. This result is mainly because the low-ability subjects couldn’t discern the hallucinated answers with the correct ones, and it contests the general idea that ChatGPT can complement the workers with less expertise.
    Keywords: laboratory experiment, ChatGPT, labor productivity
    JEL: C91 J24 O33 D83
    Date: 2024
  7. By: Maria A. Cattaneo; Christian Gschwendt; Stefan C. Wolter
    Abstract: Advances in technology have always reshaped labor markets, increasing demand for highly skilled workers and automating human labor in many areas, leading to job creation but also losses. However, emerging AI innovations like ChatGPT may reduce labor demand in occupations previously considered "safe" from automation. While initial studies suggest that individuals adjust their educational and career choices to mitigate automation risk, the subjective monetary value of reduced automation risk is unknown. This study quantifies this value by assessing individuals' preferences for occupations for a hypothetical child in a discrete-choice experiment with almost 6'000 participants. The results show that survey respondents' willingness to accept lower wages for an occupation with a lower exposure to automation of 10 percentage points is substantial and amounts to almost 20 percent of an annual gross wage. Although the preferences are quite homogeneous, there are still some significant differences in willingness to pay between groups, with men, younger people, those with higher levels of education, and those with a higher risk tolerance showing a lower willingness to pay.
    Keywords: Artificial intelligence, automation, willingness to pay, survey experiment
    JEL: J24 O33
    Date: 2024–04
  8. By: Valentine Fays (UMONS (Soci&ter) and ULB (CEBRIG, DULBEA)); Benoît Mahy (UMONS (Soci&ter) and ULB (CEBRIG, DULBEA)); François Ryckx (ULB (CEBRIG, DULBEA),)
    Abstract: This article is the first to examine how 1st-generation migrants affect the employment of workers born in the host country according to their origin, distinguishing between natives and 2nd-generation migrants. To do so, we take advantage of access to a unique linked employer-employee dataset for the Belgian economy enabling us to test these relationships at a quite precise level of the labour market, i.e. the firm level. Fixed effect estimates, including a large number of covariates, suggest complementarity between the employment of 1st-generation migrants and workers born in Belgium (both natives and 2nd-generation migrants, respectively). Several sensitivity tests, considering different levels of aggregation, workers’ levels of education, migrants’ region of origin, workers’ occupations, and sectors corroborate this conclusion.
    Keywords: 1st and 2nd generation migrants, Substainability, Complementarity, Moderating factors
    JEL: J15 J24 J62
    Date: 2024–04–11
  9. By: Bratti, Massimiliano (Università degli Studi di Milano); Brunetti, I. (Istituto Nazionale per l’Analisi delle Politiche Pubbliche (INAPP)); Corvasce, A. (Università degli Studi di Milano); Maida, Agata (Università degli Studi di Milano); Ricci, Andrea (INAPP – Institute for Public Policy Analysis)
    Abstract: This study leverages detailed administrative data on firms' job flows and variation across Local Labor Markets (LLMs) in the spread of COVID-19 to investigate shifts in labor demand prompted by the pandemic. To this end, we exploit the large spatial variation in the intensity of the pandemic observed in Italy. Namely, we investigate the effect of COVID-19 intensity on the composition of new hires in terms of jobs suitable for "working from home" (WFH), which emerged as a new standard during the pandemic. Our results reveal a significant increase in teleworkable-job hires in LLMs that were more severely hit by the pandemic, primarily driven by permanent contracts. An event study analysis uncovers substantial heterogeneity over time. Indeed, the effect was short-term and lasted only for two semesters after the pandemic's outbreak. Although this shift was transitory, by involving permanent hires, it had persistent effects on the structure of the workforce. An effect-heterogeneity analysis shows that effects were greater on the demand for female and younger workers and hires of larger firms, of service firms, and of those located in Northern Italy.
    Keywords: working from home, telework, labor demand, COVID-19, Italy
    JEL: D22 J23 J24
    Date: 2024–04
  10. By: Katherine B. Coffman; Scott Kostyshak; Perihan O. Saygin; Katie Coffman
    Abstract: Most studies of gender discrimination consider how male versus female candidates are assessed given otherwise identical information about them. But, in many settings of interest, evaluators have a choice about how much information to acquire about a candidate before making a final assessment. We use a large controlled experiment to explore how this type of endogenous information acquisition amplifies discriminatory outcomes in a simulated hiring environment. Across evaluators, we vary the composition of candidate pools, exploring not only environments where men outperform women on average but also environments with no gender difference or with a female advantage. Perhaps surprisingly, we observe no gender discrimination overall: conditional on their likelihood of being qualified, male and female candidates receive indistinguishable evaluations. But, we observe important differences across candidate pools. Candidates belonging to an advantaged group—the gender with the performance advantage in the pool—receive significantly better evaluations than equally qualified candidates in pools with no gender gap in performance. Similarly, candidates belonging to a disadvantaged group—the gender with a performance disadvantage in the pool—receive significantly worse evaluations relative to equally qualified candidates in pools with no gender gap in performance. This “relative advantage” bias appears in initial assessments, influences how evaluators update their beliefs about a candidate after acquiring more information, and persists in final evaluations. This bias has a significantly larger impact on evaluations when evaluators endogenously acquire information compared to treatments where we exogenously provide it, in part because we observe significant under-acquisition of information. We show that this bias leads to two important types of mistakes: evaluators miss out on talented candidates from disadvantaged groups and over-select less talented candidates from advantaged groups.
    Keywords: discrimination, information acquisition, beliefs, belief updating, stereotypes
    JEL: J16 J71
    Date: 2024
  11. By: Fatih Guvenen; Serdar Ozkan; Rocio Madera
    Abstract: Recent empirical studies document that the distribution of earnings changes displays substantial deviations from lognormality: in particular, earnings changes are negatively skewed with extremely high kurtosis (long and thick tails), and these non-Gaussian features vary substantially both over the life cycle and with the earnings level of individuals. Furthermore, earnings changes display nonlinear (asymmetric) mean reversion. In this paper, we embed a very rich “benchmark earnings process” that captures these non-Gaussian and nonlinear features into a lifecycle consumption-saving model and study its implications for consumption dynamics, consumption insurance, and welfare. We show four main results. First, the benchmark process essentially matches the empirical lifetime earnings inequality—a first-order proxy for consumption inequality—whereas the canonical Gaussian (persistent-plus-transitory) process understates it by a factor of five to ten. Second, the welfare cost of idiosyncratic risk implied by the benchmark process is between two-to-four times higher than the canonical Gaussian one. Third, the standard method in the literature for measuring the pass-through of income shocks to consumption—can significantly overstate the degree of consumption smoothing possible under non-Gaussian shocks. Fourth, the marginal propensity to consume out of transitory income (e.g., from a stimulus check) is higher under non-Gaussian earnings risk.
    JEL: E24 E60 J31
    Date: 2024–04
  12. By: Fabian Scheifele; David Popp
    Abstract: Support from local citizens is important for the scale-up of renewable energy. We investigate the impact of utility-scale wind and solar parks on employment, GDP and public finances in Brazilian municipalities using a difference-in-differences design with matching. We find a positive employment impact of 1-1.5 jobs/MW in the 15 months preceding the commissioning of a solar park, when the park is under construction, but no impacts thereafter. For wind, we find no employment impacts during the construction phase and potentially a small impact of 0.2-0.25 jobs/MW in the 12 months following commissioning. In the year after commissioning, GDP increases 23% for an average sized solar park and 12% for an average sized wind project. The impacts only decrease slightly in the following years. We also find significant persistent fiscal revenue impacts in wind compared to only a one-time tax revenue increase in solar at the time of construction. Our results provide different implications for policymakers that want to advocate for renewable energy in their towns. While for solar, the main benefit constitutes a short-term increase in low-skilled employment and public revenues, wind energy provides more long-term financial benefits but less local employment opportunities.
    Keywords: employment, renewables, local impact, difference-in-differences
    JEL: Q52 O13 O14 E24 J21 H71
    Date: 2024
  13. By: KIKUCHI Shinnosuke
    Abstract: I examine the effect of task displacement from automation technology and offshoring on wage inequality using data for Japan since 1980. First, I do not find evidence that task displacement from automation increases wage inequality, which contrasts with the finding for the US. Second, I find that the rise in offshoring has distributional consequences and is progressive after the mid-1990s. The surge in offshoring is concentrated in industries where ex-ante low-wage workers work and disproportionally increases their wages. This increase in wages is due to the increases in monthly payroll, decreases in hours worked, decreases in employment rate, and decreases in the share of offshorable occupations.
    Date: 2024–04
  14. By: Grund, Christian (RWTH Aachen University); Nießen, Anna (RWTH Aachen University)
    Abstract: Presenteeism behavior, i.e. working despite illness, is a common phenomenon wordwide and can have severe consequences for employees and firms alike. In this study, we investigate the relation between the use of company performance appraisals and employees' presenteeism behavior. We use linked-employer-employee data (the German Linked Personnel Panel) and apply pooled Poisson as well as linear fixed effects estimations. We show that the use of performance appraisals is associated with significant lower annual presenteeism days in the amount of one-half to one full day. In addition, the presence of a works council strengthens the negative relationship between performance appraisals and presenteeism. The results are driven by performance appraisals that are linked to performance-related pay, in particular. Our study contributes to the understanding of context specific behavioral consequences of HRM practices such as performance appraisals.
    Keywords: presenteeism, sickness, performance appraisals, performance pay, works councils, German Linked Personnel Panel
    JEL: M5 I12 J22 J53
    Date: 2024–03
  15. By: Patrick M. Kline; Evan K. Rose; Christopher R. Walters
    Abstract: We develop an empirical Bayes ranking procedure that assigns ordinal grades to noisy measurements, balancing the information content of the assigned grades against the expected frequency of ranking errors. Applying the method to a massive correspondence experiment, we grade the race and gender contact gaps of 97 U.S. employers, the identities of which we disclose for the first time. The grades are presented alongside measures of uncertainty about each firm’s contact gap in an accessible report card that is easily adaptable to other settings where ranks and levels are of simultaneous interest.
    JEL: C11 C13 J71
    Date: 2024–04
  16. By: Patrick Arni; Peter H. Egger; Katharina Erhardt; Matthias Gubler; Philip Sauré
    Abstract: This paper identifies the causal effects of trade shocks on worker outcomes. We exploit a unique setting based on three pillars: (i) a large, unanticipated appreciation of the Swiss franc in 2015, (ii) detailed data with firm-level exposure to trade via output markets (both domestic and foreign) and imported inputs (distinguished by their foreign labor content), which we match to (iii) worker-level panel data with rich information on labor-market outcomes. We find that increased competition in output markets induces negative effects on earnings for workers of affected firms. Conversely, a price drop of foreign inputs generates positive effects for workers of importing firms, but less so the higher the labor content of these imported inputs. All these patterns are consistent with a parsimonious model of task-based production. Moreover, positive and negative earnings effects are especially strong for workers in the lower tail of the within-firm wage distribution and, in particular, for workers who change their employer, pointing at involuntary (voluntary) job separations from firms that are negatively (positively) affected by the exchange rate appreciation.
    Keywords: trade and labor, exchange rate shock, matched employer-employee data
    JEL: F14 F16 J46
    Date: 2024
  17. By: Kniesner, Thomas J. (Claremont Graduate University); Viscusi, W. Kip (Vanderbilt University)
    Abstract: The considerable literature on the value of a statistical life (VSL) documents the wage-mortality risk tradeoffs for the working population. Regulatory analyses often must monetize risks to populations at the tails of the age distribution. Because of the longer life expectancy for children, there have been proposals to add a premium to their VSL, which would generate an inconsistency with revealed preference estimates of the VSL trajectory over the life cycle. The shorter life expectancy among older people has led to various arbitrary senior discounts for seniors' life expectancy. Application of the value of a statistical life year (VSLY) can address valuation of small changes in life expectancy. Examples of inappropriate age adjustments that we discuss include practices by the Consumer Product Safety Commission and the Environmental Protection Agency.
    Keywords: circular A-4, Value of a Statistical Life, age, children, elderly, Value of a Statistical Life Year, VSL, VSLY
    JEL: J17 J28 I18 H40 K32
    Date: 2024–03

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.