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on Labor Markets - Supply, Demand, and Wages |
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Issue of 2024‒07‒29
eighteen papers chosen by |
| By: | Jorge Pérez Pérez; José G. Nuño-Ledesma |
| Abstract: | Between 2004 and 2018, the spread of wages in Mexico's private labor sector remained stable. Nonetheless, the underlying factors behind salary dispersion underwent significant shifts. To uncover these changes, we analyze an employer-employee dataset comprising the near-universe of Mexico's formal employment. We estimate log wage models and decompose earnings dispersions into worker, workplace and sorting components. At the national level, we find that sorting increased its importance over time. While worker-level factors were the main contributors to salary variability in the 2004-2008 period, workplace factors became as important as worker-level factors in the 2014-2018 time segment. The influence of workplace factors on wage dispersion correlates negatively with per capita GDP at the regional level. |
| Keywords: | Assortative matching;regional development;wage dispersion;workplace wage premia |
| JEL: | J21 J31 R23 O15 O54 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:bdm:wpaper:2024-06&r= |
| By: | Thomas Fackler; Oliver Falck; Moritz Goldbeck; Fabian Hans; Annina Hering |
| Abstract: | We investigate differences in labor demand between German automotive firms specializing in green propulsion technology and those with a focus on combustion engines. To this end, we introduce a firm-level labor demand index based on the near-universe of online job postings and firms’ patent portfolios. Workforce adjustments are a crucial dimension of technology-related structural change, and labor demand as a highly reactive decision parameter is an ideal measure to detect employment adjustments. Our index enables us to distinguish labor demand by firms’ greenness in real-time, a notable advantage over survey or administrative data. In a difference-in-differences setup, we exploit the poly-crisis triggered by unexpected escalations of trade conflicts and sustained by consequences of the pandemic and the war in Ukraine. We find green firms’ labor demand is significantly and persistently higher than before the outbreak of the poly-crisis, by 34 to 50 percentage points compared to firms with a focus on combustion technology. This gap widens over time and is not driven by unobserved firm heterogeneity. Green firms systematically adjust labor demand towards production and information technology jobs. |
| Keywords: | low carbon technology, firm employment decisions, sustainability, disruptive innovation |
| JEL: | C55 J23 M51 O14 O33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11160&r= |
| By: | Emanuele Grassi (Dipartimento di Scienze dell’Economia, Università del Salento, Italy; Rimini Centre for Economic Analysis); Marco Savioli (Dipartimento di Scienze dell’Economia, Università del Salento, Italy; Rimini Centre for Economic Analysis) |
| Abstract: | The study investigates the gender wage gap among PhD recipients in Italy, focusing on whether research-oriented jobs mitigate wage discrimination. Utilizing data from the Professional Integration Survey of PhDs, it employs quantile and Recentered Influence Function regressions to analyze wage disparities across the wage distribution. Findings reveal a persistent gender wage gap across all quantiles, with research jobs offering a wage premium that does not entirely close the gap. The analysis contributes to understanding the impact of occupational segregation and job types on wage disparities, suggesting policy interventions to address gender wage inequalities in academia and beyond. The paper highlights the need for further research and policy efforts to achieve gender parity in professional fields, particularly high-skilled sectors like private and public research entities. |
| Keywords: | Gender Wage Gap, PhD Employment, Research Jobs, Wage Discrimination, Academic Labor Market, Quantile Regression |
| JEL: | J16 J31 I23 J24 J71 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:rim:rimwps:24-10&r= |
| By: | Croce, Giuseppe; Piselli, Paolo |
| Abstract: | The gap in the employment dynamics between larger urban areas and other areas has widened dramatically in recent decades in advanced economies. A proposed explanation for this trend argues that the technological change occurs with greater intensity in larger urban areas than in medium and small cities, since it interacts with the urban agglomeration forces. In particular, more qualified, better paid jobs are expected to grow more in larger cities. This work focuses on the dynamics of most paying jobs and their spatial distribution across different-size cities in Italy in the period between 1993 and 2016. We investigate whether their share has grown and whether its growth has actually been concentrated in the larger cities. Using Bank of Italy’s Survey of Household Income and Wealth (SHIW), we find that the share of most paying jobs has increased in aggregate but its growth in large cities was much weaker than in medium and small cities and even negative after 2008. We also estimate a probit IV model of the worker’s probability of being employed in a most paying job across cities. The results show that being in a bigger city does not increase the chances of getting a better paid job. Furthermore, a shift-share decomposition reveals that the weak growth of most paying jobs in larger cities is only partly explained by the sectoral shifts. Our evidence can be explained by the slow diffusion of new technologies in the Italian economy. Moreover, it is consistent with studies showing the poor performance of the largest urban economies in Italy. |
| Keywords: | employment change, technological change, most paying jobs, cities, local labour markets, agglomeration |
| JEL: | J24 J31 O14 O18 O33 R11 |
| Date: | 2024–06–18 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121228&r= |
| By: | David Koll; Dominik Sachs; Fabian Stürmer-Heiber; Hélène Turon |
| Abstract: | We formalize and estimate the dynamic marginal efficiency cost of redistribution (MECR) in the spirit of Okun’s “leaky bucket” to compare the MECR of an income-contingent childcare subsidy program and of the income-contingent tax and transfer schedule. We set up a dynamic structural model of heterogeneous households choosing their childcare demand and maternal labor supply. Allowing for the availability of informal childcare and for consumption of leisure, we estimate this model within the German context. Our analysis identifies two competing forces. (i) Labor supply responses increase the MECR of the childcare subsidy relative to the tax and transfer system. (ii) Child development effects decrease the MECR of the childcare subsidy relative to the income tax. We show that, under most plausible assumptions on the long-term returns to childcare attendance for children growing up in households of different incomes, progressive childcare subsidies are the more efficient redistribution tool. |
| Keywords: | Female Labor Supply, Childcare, Family Policies, Fiscal Externalities, Dynamic Discrete Choice, Redistribution |
| JEL: | H23 H31 J13 J22 J24 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_570&r= |
| By: | Prashant Bharadwaj; Rahul Deb; Ludovic Renou |
| Abstract: | We characterize the conditions under which the wage distributions for two groups are consistent with a general model of statistical discrimination. We adapt this theoretical characterization to develop a novel empirical test, the rejection of which we interpret as evidence of taste-based discrimination. In doing so, we provide a theoretical foundation via which the wage structure effect in the decomposition of wage distributions can be interpreted as evidence of taste-based discrimination. We provide a proof of concept application using Census and NLSY-79 data, which suggests taste-based discrimination at work against Black male workers in several broad occupation categories. |
| JEL: | J01 J7 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32562&r= |
| By: | Max Brès; Philipp Kircher; David Koll |
| Abstract: | This paper provides causal evidence on the impact of subsidy re-allocation between high technology sectors and low-skill sectors on local labor markets. We exploit a policy targeting under-performing employment areas, France’s Aides à Finalité Régionale, which relaxes rules governing the allocation of firm subsidies while keeping their level constant. In response, policy makers re-allocate subsidies away from research and development to mainly low-skilled manufacturing and service sectors. It triggers a persistent improvement of employment, mainly through increased low-skilled manufacturing employment and at the expense of R&D related occupations. In the long term, though, labor income and productivity decrease. Finally, at the individual level, workers employed in manufacturing at the time of the treatment benefit on average of 2% higher hourly wage even 10 years after the policy was lifted. |
| Keywords: | subsidy allocation, place-based policies, manufacturing, R&D, employment and wages, underperforming areas |
| JEL: | H25 J21 J31 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_573&r= |
| By: | Bosco, Bruno; Bosco, Carlo Federico; Maranzano, Paolo |
| Abstract: | This paper uses the Italian income tax treatment of 2006/7 as a quasi-natural tax experiment to offer some fresh empirical evidence on how labour supply responds to exogenous income tax hikes. We adopt the identification strategy based on TWFE panel data Difference-in-Differences (DID) model to define the correct statistical framework of the study, and to benefit from the specific features of the above tax experiment, namely homogeneity and contemporaneity of the treatment. Results show that the extensive negative adjustments of various response variables measuring the supply of labour services offered by treated taxpayers are statistically significant, rapid, and strong but not long-time lasting. Not surprisingly, we also find that that treated families reduce in a similar manner their consumption with respect to families in the control groups. Analogous adjustment responses to tax hikes characterise the growth of per-capita regional GDP. The estimated aggregate effects of tax hikes are further compared with the spatial-temporal patterns observed for every response variable in treated and untreated regions. |
| Keywords: | Public Economics |
| Date: | 2024–06–27 |
| URL: | https://d.repec.org/n?u=RePEc:ags:feemwp:343514&r= |
| By: | Germán J. Reyes; Evan Riehl; Ruqing Xu |
| Abstract: | We examine a natural experiment in Brazil in which similar students took the same standardized test as either a low-stakes school accountability exam or a high-stakes admission exam for the country's top universities. Using administrative data and a difference-in-differences design, we find that test score gaps between high- and low-income students expanded on the high-stakes exam, consistent with wealthy students engaging in test prep. Yet the increase in stakes made scores more informative for students' college outcomes. Thus the "muddling" of information on natural ability and test prep improved the quality of the score signal, although it also exacerbated inequality. |
| JEL: | I23 I24 J24 M5 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32608&r= |
| By: | Xiaohui Li (The School of Accounting and Finance, Hong Kong Polytechnic University); Yao Shen (Zicklin School of Business, c, City Univeristy of New York); Jing Xie (Department of Finance and Business Economics, Faculty of Business Administration, University of Macau) |
| Abstract: | We find that investors are more negative towards firm management in proxy voting when CEOs have higher job mobility. Specifically, we document an increased dissenting vote against management-sponsored compensation proposals after an exogenous positive shock to CEO job mobility. Consistent with the rent extraction hypothesis, the effect is more pronounced for firms with poor past performance, overpaid CEOs, and weaker corporate governance. Proxy advisors recommend more against firm management after the shock, casting a larger influence on voting outcomes. Moreover, our investor level analysis suggests that larger investors care less about job mobility in their voting. |
| Keywords: | Proxy Voting; Executive Compensation; Labor Market; Proxy Advisor; Mutual Funds |
| JEL: | G30 G34 J33 M12 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:boa:wpaper:202412&r= |
| By: | Reyes, Germán (Middlebury College) |
| Abstract: | This paper shows that the bunching of wages at round numbers is partly driven by firm coarse wage-setting. Using data from over 200 million new hires in Brazil, I first establish that contracted salaries tend to cluster at round numbers. Then, I show that firms that tend to hire workers at round-numbered salaries have worse market outcomes. Next, I develop a wage-posting model in which optimization costs lead to the adoption of coarse rounded wages and provide evidence supporting two model predictions using two research designs. Finally, I examine some consequences of coarse wage-setting for relevant economic outcomes. |
| Keywords: | wage-setting, bunching at round numbers, behavioral firms |
| JEL: | D22 E24 D91 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17039&r= |
| By: | Nikhil Datta |
| Abstract: | This paper studies monopsony power in a low pay labour market and explores its determinants. I emphasise the role of the spatial distribution of activity and workers' distaste for commuting in generating imperfect substitutability between jobs, and heterogeneity in monopsony power. To formalise the role of commutes in generating monopsony power I develop a job search model where utility depends on wages, commutes and an idiosyncratic component. The model endogenously defines probabilistic spatial labour markets which are point specific and overlapping, and generates labour supply to the firm elasticities which vary across space. Distaste for commuting is shown to increase monopsony power, but does so heterogeneously, increasing monopsony power in rural areas more than in denser urban ones. Using detailed applicant data for a firm with hundreds of establishments across the UK, coupled with two sources of job-establishment level exogenous wage variation I estimate the model parameters and show that commutes generate considerable spatial heterogeneity in monopsony power and are responsible for approximately 1/3 of the total wage markdown. A decomposition exploiting the granularity of the model demonstrates that 40% of spatial variation in monopsony power is within Travel To Work Areas. Calculating employer concentration based on highly-granular 1km2 grids and probability of applying across grids based on pair-wise grid travel times shows how coarsely discretised labour markets such as Commuting Zones can cause sizeable mismeasurement in concentration measures. |
| Keywords: | monopsony |
| Date: | 2024–06–25 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2012&r= |
| By: | Shi, Xiangyu; Zhang, Xin |
| Abstract: | We study how extreme (high) temperatures affect firm dynamics---entry, exit, and aggregate productivity---in Chinese manufacturing sectors. Existing studies focus on the effects on incumbent firms (intensive margin), while we examine the effects on entry and exit (extensive margin), and their relationship with the aggregate productivity. Extreme temperatures lower the productivity of incumbent firms (productivity effects), while selecting firms with higher productivity to survive (selection effect). Exploiting a unique data set on the registration information of the universe of firms allows us to document this novel general equilibrium mechanism, whereby resources released by eliminated low-productivity firms are reallocated to firms with higher productivity. Thus, the combined effects on aggregate productivity are muted, a finding that differs from the consensus in the literature that extreme (high) temperatures worsen productivity and economic outcomes. We quantify these effects using a heterogeneous firm framework a la Melitz (2003). The results shed light on the importance of firm dynamics in stipulating climate policies. |
| Keywords: | C15, D21, D22, E23, Q56 |
| JEL: | C1 D2 E2 L2 Q5 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121351&r= |
| By: | Navarini, Lorenzo; Verhaest, Dieter |
| Abstract: | When individuals risk being overeducated for their jobs, returns to education might be lower and heterogeneous. To investigate this, we develop a novel framework that decomposes returns using an expected value conditional on overeducation risks and penalties. We estimate these components using Belgian data and a dynamic model of endogenous educational choices, overeducation, and wages. Our findings reveal that overeducated individuals experience a persistent wage penalty. However, as both medium and higher levels of education are associated with an overeducation risk, this risk usually plays a limited role in explaining average returns. Moreover, consistent with job polarization, this role is even positive for Bachelor's degrees as these degrees rather reduce the overeducation risks and the associated penalties. Finally, we find that overeducation generates heterogeneous realized returns among Master's graduates. |
| Keywords: | Skill Mismatch, Overeducation, Dynamic Discrete Choice Model, Heterogeneous Returns to Education, Educational Expansion |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1456&r= |
| By: | William F. Diamond; Tim Landvoigt; Germán Sánchez Sánchez |
| Abstract: | We analyze the impact of fiscal and monetary stimulus in an economy with mortgage debt, where inflation redistributes from savers to borrowers. We show theoretically that fiscal transfers without future tax increases cause a surge in inflation, increasing consumption demand and house prices. The power of fiscal stimulus grows when borrowers are more indebted. We then show quantitatively that transfers followed by easy monetary policy cause a surge in inflation which helps explain features of the post-Covid boom, including a boom in output and house prices. This boom comes with a longer-term contraction, since redistribution reduces borrower labor supply. |
| JEL: | E44 E52 E63 G51 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32573&r= |
| By: | Demetrio Guzzardi (Institute of Economics and EMbeDS, Scuola Superiore Sant’Anna); Salvatore Morelli (University of Roma Tre, Stone Center on Socio-Economic Inequality, GC-CUNY, and CSEF) |
| Abstract: | Detailed distributional estimates at finer geographical levels remain scarce, despite their critical relevance for household well being and policy intervention. This paper leverages Italian income tax records dating back to 1976 focusing on top income concentration and inequality across the country’s regions, macro-areas, and the recently introduced classification of the National Strategy for Inner Areas (SNAI). Our analysis reveals a persistent rise in income concentration over the past few decades, particularly among the top earners, while also highlighting nuanced regional and sub-regional dynamics. Notably, city size plays a crucial role, with larger cities experiencing a more pronounced level of income concentration compared to smaller ones. Southern regions exhibit lower income concentration levels among the top income groups, emphasizing the need for disaggregated analyses to capture these complexities accurately. |
| Keywords: | Income Inequality; Top Income Shares; Italy; Inner Areas; Spatial Inequality; Income Tax Data; National Accounts. |
| JEL: | D31 H20 J3 R1 |
| Date: | 2024–06–12 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:718&r= |
| By: | Anna Aizer; Adriana Lleras-Muney; Katherine Michelmore |
| Abstract: | Child poverty fell to historic lows in 2021, in large part due to the temporary expansion of the Child Tax Credit (CTC). We consider the possible implications of this expansion on children’s short- and long-term development. To do so, we review the available short-run evidence from the 2021 expansion and the existing research evidence on the longer run effects of similar income transfers in childhood on child health and human capital. We conclude that the CTC likely improved child health and well-being in the short and long run, with greater impacts for poor children and modest or nonexistent effects for non-poor children. Moreover, the effects might be more substantial for younger children and for those in places with weaker safety nets. |
| JEL: | I24 I30 J38 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32609&r= |
| By: | Shi, Xiangyu |
| Abstract: | Why China was not the origin of the Industrial Revolution but rose from imperial dynasties and experienced a growth miracle in the past four decades? We find that its root is China's imperial examination system (keju), which explains the fall and rise of historical, modern, and contemporary China. Using three instrumental variable approaches, we find that keju significantly facilitates contemporary innovation and business creation, by raising the contemporaneous level of human capital, shaping an innovative and productive culture, and fostering efficient institutions. Keju had positive effects on the development of modern China before the People's Republic of China era, but its effects were most salient after the economic reform in 1978. In historical periods, keju diverted talents away from scientific/technological sectors, leading to sluggish development in the Ming and Qing dynasties. |
| Keywords: | imperial examination system, human capital, culture, institution, innovation, business creation, China |
| JEL: | D2 E2 J2 N3 O1 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121348&r= |