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on Labor Markets - Supply, Demand, and Wages |
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Issue of 2024‒05‒27
nineteen papers chosen by |
| By: | Fays, Valentine (University of Mons); Mahy, Benoît (University of Mons); Rycx, François (Free University of Brussels) |
| 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, substitutability, complementarity, moderating factors |
| JEL: | J15 J24 J62 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16887&r=lma |
| By: | Andrew Garin; Emilie Jackson; Dmitri K. Koustas |
| Abstract: | Rising self-employment rates in U.S. tax data that are absent in survey data have led to speculation that tax records capture a rise in new “gig” work that surveys miss. Drawing on the universe of IRS tax returns, we show that trends in firm-reported payments to “gig” and other contract workers do not explain the rise in self-employment reported to the IRS; rather, that increase is driven by self-reported earnings of individuals in the EITC phase-in range. We isolate pure reporting responses from real labor supply responses by examining births of workers’ first children around an end-of-year cutoff for credit eligibility that creates exogenous variation in tax rates at the end of the tax year after labor supply decisions are already sunk. We find that ex-posing workers with sunk labor supply to negative marginal tax rates results in large increases in their propensity to self-report self-employment—only a small minority of which leads to bunching at kink-points. Consistent with pure strategic reporting behavior, we find no impact on reporting among taxpayers with no incentive to report additional income and no effects on firm-reported payments of any kind. Moreover, we find these reporting responses have grown over time as knowledge of tax incentives has become widespread. Quantification exercises suggest that changes in taxpayer reporting behavior are a major driver of discrepancies between self-employment trends in self-reported and third-party reported data. Our findings suggest caution is warranted before deferring to self-reported tax data over other data sources when measuring labor market trends. |
| JEL: | H26 J21 J41 J46 J82 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32368&r=lma |
| By: | Sophie Cottet |
| Abstract: | This paper uses administrative employer-employee data to uncover the effects of a large payroll tax reduction for minimum-wage workers in France. Exploiting the change in labor costs both at the job level and at the firm level, I find that the policy spurred an additional 13 percentage points increase in the number of minimum-wage jobs, and that these extra jobs stem exclusively from firms which had previously very few or no minimum-wage workers. On the other hand, firms which already employed workers at minimum-wage levels, and therefore benefit ex ante from a cash windfall, increase employment irrespective of wage levels. These firms grow by an additional 4 percent in the first two years following the reform. This effect is stronger in liquidity-constrained and credit-constrained firms. Overall, these results show that not all firms react to changes in relative labor costs and highlight the importance of alleviating liquidity constraints for firm growth. |
| Keywords: | payroll taxes, firm behaviour, rent sharing, minimum wage |
| JEL: | H22 H25 H32 J21 J23 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11076&r=lma |
| By: | Oriana Bandiera; Ananya Kotia; Ilse Lindenlaub; Christian Moser; Andrea Prat |
| Abstract: | Are labor markets in higher-income countries more meritocratic, in the sense that worker-job matching is based on skills rather than idiosyncratic attributes unrelated to productivity? If so, why? And what are the aggregate consequences? Using internationally comparable data on worker skills and job skill requirements of over 120, 000 individuals across 28 countries, we document that workers' skills better match their jobs' skill requirements in higher-income countries. To quantify the role of worker-job matching in development accounting, we build an equilibrium matching model that allows for cross-country differences in three fundamentals: (i) the endowments of multidimensional worker skills and job skill requirements, which determine match feasibility; (ii) technology, which determines the returns to matching; and (iii) idiosyncratic matching frictions, which capture the role of nonproductive worker and job traits in the matching process. The estimated model delivers two key insights. First, improvements in worker-job matching due to reduced matching frictions account for only a small share of cross-country income differences. Second, however, improved worker-job matching is crucial for unlocking the gains from economic development generated by adopting frontier endowments and technology. |
| JEL: | C78 E24 J24 J31 O11 O12 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32375&r=lma |
| By: | Manuel Aepli; Samuel Muehlemann; Harald Pfeifer; Jürg Schweri; Felix Wenzelmann; Stefan C. Wolter |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11066&r=lma |
| By: | Davis, Steven J. (Hoover Institution) |
| Abstract: | The COVID-19 pandemic instigated a big shift in working arrangements. I first describe the scale of this shift in the United States, drawing on the Survey of Working Arrangements and Attitudes and other sources. I then review differences, circa 2023, in work-from-home rates across industries, demographic groups, and countries. The big shift had surprisingly benign (or even positive) effects on productivity, which is one reason it has endured. Compared to other shocks that strike modern economies, the big shift is also unusual in other respects: It relaxes time budget constraints, improves flexibility in time use, enhances individual autonomy, relaxes locational constraints, drives a major re-sorting of workers to jobs and employers, and alters the structure of wages. The big shift also reduces wage-growth pressures during the transition to new working arrangements and life styles. The shift benefits workers, on average, even as it lowers non-labor costs and real product wages for firms. |
| Keywords: | COVID-19, work from home, remote work, productivity, job amenities, time savings, flexibility in time use, personal autonomy, locational constraints, Great Re-Sorting, wages |
| JEL: | D2 D83 E24 J22 J31 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16932&r=lma |
| By: | Nikolova, Milena |
| Abstract: | This study examines work orientations as a novel determinant influencing job search behaviors, quit intentions, and workplace effort, thereby integrating this concept into the field of labor economics. Work orientations, the intrinsic beliefs regarding the role of work in one's life, relate to viewing work as a paycheck, a career step, or a calling. Drawing on original, nationally representative Dutch data on work orientations, this paper reveals that those who view their work as a calling rather than a job are more committed to their roles, have lower quit intentions and are less likely to be job searching, and do not endorse 'quiet quitting'-the act of fulfilling only the minimum requirements to maintain employment. Conversely, individuals with career-centered work perspectives are more likely to consider leaving their jobs, engage actively in job searches, and show diminished work effort compared to those with a job orientation. However, this group is still unlikely to approve of quiet quitting in comparison to those who view work primarily as an income source. A key finding is that work orientations significantly predict quit intentions, job search behaviors, and effort levels-surpassing the predictive power of job satisfaction and perceived work meaningfulness. Specifically, work orientations account for about 40 % of the variation in quit intentions and job search behaviors. These insights suggest that work orientations could be a crucial, yet overlooked, factor in understanding employee behavior, challenging the conventional perspective of workers as simply income-driven and countering the notion of work as an inherent disutility. |
| Keywords: | work orientations, effort, quit intentions, job search |
| JEL: | J24 J28 J81 M59 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:1429&r=lma |
| By: | Carla Moreno; Sita Slavov |
| Abstract: | We examine the labor supply impact of a 2016 policy that allows retirement-eligible individuals covered by Peru’s private pension system to receive retirement benefits as a lump sum rather than as an annuity. We present a theoretical model predicting that, for liquidity constrained workers, the lump sum option makes formal employment (requiring pension participation) more attractive relative to informal employment (not requiring pension participation); it also encourages early retirement. Using household panel data, we estimate the impact of the 2016 policy on the labor supply of workers covered by the private pension system compared to workers covered by the alternative pay-as-you-go defined benefit pension (which was unaffected by the policy). The policy is associated with an increase in the probability of being retired at ages 50 (early retirement age for women), 55 (early retirement age for men), and 65 (full retirement age for all workers). We also find increases in formal sector employment among women in their late 40s and men in their early 50s, consistent with increased efforts to qualify for early retirement (which requires recent pension contributions). The policy’s effects are concentrated among workers with less education, who are more likely to be liquidity constrained. |
| JEL: | G51 H55 J26 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32380&r=lma |
| By: | Perry Singleton (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244) |
| Abstract: | In a model of occupational safety, biased perceptions of risk decrease welfare, which may justify government regulation. Bias is examined empirically by the correlation between subjective and objective risk, the former measured by self-reported exposure to death on the job. The correlation is negligible among workers with no high school diploma, consistent with underestimating risk in more dangerous occupations, and strongest among more educated workers when objective risk is specific to harmful and noxious substances, which in psychological studies rank high in dread. Biased perceptions of risk may also lead to biased estimates of value of statistical life. VSL estimates are negligible across all education levels using the all cause fatality rate, but consistently greater among more educated workers using the fatality rate due to harmful and noxious substances, upwards of $70 million and more. Optimal policy is considered, including an illustrative simulation of a risk ceiling. |
| Keywords: | Compensating wage differentials, value of statistical life, occupational safety, risk perception |
| JEL: | J31 J81 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:max:cprwps:263&r=lma |
| By: | Biewen, Martin (University of Tuebingen); Erhardt, Pascal (University of Tübingen) |
| Abstract: | We evaluate the distributional effects of a minimum wage introduction based on a data set with a moderate sample size but a large number of potential covariates. Therefore, the selection of relevant control variables at each distributional threshold is crucial to test hypotheses about the impact of the treatment. To this end, we use the post-double selection logistic distribution regression approach proposed by Belloni et al. (2018a), which allows for uniformly valid inference about the target coefficients of our low-dimensional treatment variables across the entire outcome distribution. Our empirical results show that the minimum wage crowded out hourly wages below the minimum threshold, benefitted monthly wages in the lower middle but not the lowest part of the distribution, and did not significantly affect the distribution of hours worked. |
| Keywords: | wage structure, automatic specification search, double machine learning |
| JEL: | J31 C3 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16894&r=lma |
| By: | Ben Ost; Weixiang Pan; Douglas A. Webber |
| Abstract: | We examine how a student's field of degree and institution attended contribute to the labor market outcomes of young graduates. Administrative panel data that combines student transcripts with matched employer-employee records allow us to provide the first decomposition of premia into individual and firm-specific components. We find that both major and institutional premia are more strongly related to the firm-specific component of wages than the individual-specific component of wages. On average, a student's major is a more important predictor of future wages than the selectivity of the institution attended, but major premia (and their relative ranking) can differ substantially across institutions, suggesting the importance of program-level data for prospective students and their parents. |
| Keywords: | College major; Higher education; Wage decomposition; Returns to institution; Firm effect; College premium |
| JEL: | I23 I26 I21 |
| Date: | 2024–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2024-18&r=lma |
| By: | Doon, Roshnie; Scicchitano, Sergio |
| Abstract: | Having highly educated workers can be beneficial for organizations in terms of innovation and problem-solving capabilities, however when underpaid and underemployed, overeducated workers may experience feelings of frustration and stagnation as they are unable to fully utilize their skills and knowledge. This can result in high levels of job dissatisfaction and a high employee turnover rate. While the literature on returns to education and overeducation is extensive in developed countries, evidence from developing (and Caribbean) countries remains scarce. This study will aim to examine the returns to education and the overeducation of public sector workers in Trinidad and Tobago. By using the Ordinary Least Squares (OLS), Quantile Regression (QR), Recentred Influence Function (RIF) and a pseudo-panel approach to address the presence of Omitted Variable Bias (OMV), and Endogeneity, as well as CSSP data for 1991-2015, this study finds that the average returns to education in Trinidad and Tobago are 19.2% highlighting the downward bias from the OLS estimate of 11.5%. The average returns of overeducated workers although positive appear to be influenced by their year of birth, so the earnings of overeducated persons born between 1935-1942, and 1943-1950, were lower than workers born later on in 1975-1982, and 1983-1990. |
| Keywords: | Education Mismatch, Overeducation, Quantile Regression, Recentred Influence Function, Pseudo Panel, Public Sector |
| JEL: | J01 J24 C21 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:1431&r=lma |
| By: | Matthew A. Kraft; Melissa Arnold Lyon |
| Abstract: | We examine the state of the U.S. K-12 teaching profession over the last half century by compiling nationally representative time-series data on four interrelated constructs: occupational prestige, interest among students, the number of individuals preparing for entry, and on-the-job satisfaction. We find a consistent and dynamic pattern across every measure: a rapid decline in the 1970s, a swift rise in the 1980s extending into the mid 1990s, relative stability, and then a sustained decline beginning around 2010. The current state of the teaching profession is at or near its lowest levels in 50 years. We identify and explore a range of hypotheses that might explain these historical patterns including economic and sociopolitical factors, education policies, and school environments. |
| JEL: | I20 J21 J45 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32386&r=lma |
| By: | Katja Maria Kaufmann; Mark Jeffrey Spils |
| Abstract: | We analyze the short- and long-run effects of a policy change in Dutch secondary schools, which aimed at increasing the fraction of STEM graduates overall and in particular among previously underrepresented groups. Mandatory STEM hours were reduced in the STEM field, which is a prerequisite for enrolling in a STEM major at university. Hours decreased more strongly in the academic track (required for enrollment in research universities) than in the technical track (required for universities of applied sciences). Employing a difference-in-difference approach with Dutch administrative data, we find that the policy led to a significant increase in the take-up of the STEM field in high school, especially for women. In the longer-run, however, enrollment in STEM majors at university did not increase. Instead, after the policy change previously underrepresented groups, such as women and individuals from low-income families, were even relatively less likely to pursue a STEM degree. The decrease of women graduating from STEM was primarily driven by women with STEM parents, suggesting that it was due to negative signals about their preparedness for a STEM major. |
| Keywords: | STEM, curriculum change, major choice, educational, labor and family formation outcomes |
| JEL: | I23 I28 J24 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_536&r=lma |
| By: | Guido Ascari; Jakob Grazzini; Dominico Massaro |
| Abstract: | The Covid-19 shock caused a dramatic spike in the number of retirees – a phenomenon dubbed the “Great Retirement†– and a prolonged con- traction in the labor force. This paper investigates the impact of the Great Retirement on the post-pandemic surge of inflation, via the labor market. First, retirement is generally countercyclical, and the peculiarity of the pan- demic shock was just in its size: the “Great Layoff†in March and April 2020 triggered the Great Retirement. Hence, a transitory labor demand shock generated a persistent labor supply shock. Second, counties more exposed to the Great Layoff exhibit a relatively higher increase in wages. Finally, an estimated model with endogenous labor market participation quantitatively assesses the overall contribution of the Great Retirement to inflation from 2020:Q1 up to 2023:Q2 to be roughly equal to 3.7 percentage (cumulative) points. |
| Keywords: | Great Retirement; Labor Force; Wages; Inflation |
| JEL: | E30 E24 J21 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:812&r=lma |
| By: | Enrico Nichelatti; Maria Jouste; Pia Rattenhuber |
| Abstract: | The debate over universal basic income (UBI) has gained traction in the developing world in recent years. We analyse the effects of four UBI schemes on poverty and inequality measures during normal times and times of crisis in Uganda and Zambia. We use static microsimulation models and nationally representative household surveys for each country. Our results show that in Zambia, where the existing social protection benefits have more extensive coverage, the least generous UBI benefit leads to higher poverty and inequality compared to existing benefits. |
| Keywords: | Universal basic income, COVID-19, Microsimulation, Poverty, Inequality |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2024-21&r=lma |
| By: | Richard Hornbeck; Shanon Hsuan-Ming Hsu; Anders Humlum; Martin Rotemberg |
| Abstract: | We examine the long transition from water to steam power in US manufacturing, focusing on early users of mechanical power: lumber and flour mills. Digitizing Census of Manufactures manuscripts for 1850 to 1880, we show that as steam costs declined, manufacturing activity grew faster in counties with less waterpower potential. This growth was driven by steam powered entrants and agglomeration, as water powered incumbents faced switching barriers primarily from sunk costs. Estimating a dynamic model of firm entry and steam adoption, we find that the interaction of switching barriers and high fixed costs creates a quantitatively important and socially inefficient drag on technology adoption. Despite substantial entry and exit, switching barriers remained influential for aggregate steam adoption throughout the 19th century, as water power required lower fixed costs and therefore was attractive to relatively low productivity entrants. These entrants then became incumbents, locked into water power even if their productivity grew. |
| JEL: | D25 N61 O14 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32384&r=lma |
| By: | Chandra, Sonal; Chong, Terence Tai Leung |
| Abstract: | India has enacted several affirmative action policies since the 1990s to benefit the lower castes. This paper investigates if caste still affect an individual’s income in India today. Previous studies in this field have focused on specific regions or castes, and there is a dearth of pan-India empirical studies using panel data to investigate the relationship between caste and income. There is also a lack of studies that highlight the factors that help accentuate or ameliorate the caste-based income disparity in India. This paper addresses these gaps. The sample used for this paper is composed of respondents from all across India. Using the Indian Human Development Survey (IHDS) panel data, it is found that although the impact of caste on income has reduced, lower caste individuals’ income is still lower than that of their upper caste counterparts. The paper also finds evidence that the effects of caste on income are ameliorated in rural areas and that higher state-level GDP per capita and attainment of at least high school-level qualifications also contribute to reducing the impact of caste on income. Finally, this paper finds that the lower the caste, the stronger the ameliorating effect of attaining a high school-level qualification and state-level GDP per capita. |
| Keywords: | Caste; Income Disparity; India |
| JEL: | D31 J71 O15 |
| Date: | 2024–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120639&r=lma |
| By: | Eslava, Marcela; Meléndez, Marcela; Ulyssea, Gabriel; Urdaneta, Nicolás; Flores, Ignacio |
| Abstract: | The relationship between firms and inequality has been a focus of recent attention globally. This chapter summarizes basic facts about this relationship for Latin America. Unlike advanced economies where superstar firm growth has prompted concerns over disproportionate income growth at the top, the facts we summarize illustrate that the main concern for Latin America is the extreme prevalence of tiny businesses whose workers and owners tend to populate the bottom income segments. The empirical likelihood that these businesses improve their productivity and grow to hire more workers and pay better wages is also very low. The region displays a deficit of employment generation in SMEs, by contrast to both microbusinesses (including self-employment) and large corporations. While the former tend to remunerate both workers and owners with very low incomes, the latter pay high wages but also exhibit low labor shares. |
| JEL: | E20 J21 O54 |
| Date: | 2024–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:122760&r=lma |