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on Labor Markets - Supply, Demand, and Wages |
| By: | Michelle Rendall (Department of Economics, Monash University); Satoshi Tanaka (School of Economics, University of Queensland); Yi Zhang (School of Economics, University of Queensland) |
| Abstract: | This paper studies the extent of skill mismatch across college major-occupation combinations. In the framework of this paper, skill mismatch is measured through individual wage losses in partial equilibrium and through output losses in general equilibrium. The model relies on the estimation of major-occupation returns based on the Roy model. Using Australian administrative tax panel data containing employment history and university degree information, we find sizeable wage losses, up to 28 percent, but smaller general equilibrium output losses, up to 10 percent – at the upper bound – from workers being allocated to occupations not well linked to their majors. Our results show that STEM, Commerce, and Social Science and Arts majors are the main drivers of aggregate mismatch, but a worker’s occupational mismatch declines over the life cycle, and, most importantly, in general equilibrium, disappears almost entirely by age 35. |
| Keywords: | Skill Mismatch, College Major, Occupation, Roy Model, Administrative Tax Record |
| JEL: | E24 J24 J31 |
| URL: | https://d.repec.org/n?u=RePEc:qld:uqmrg6:49 |
| By: | Benjamin W. Cowan; Kairon Shayne D. Garcia |
| Abstract: | We examine how politics and policy have affected remote-work rates in the wake of the COVID-19 pandemic. Using the Current Population Survey, American Community Survey, and the American Time Use Survey, which have several different measures of remote work, we examine how trends in remote work vary by state-level characteristics. We show that state-level measures of the length and stringency of COVID protection policies are not correlated with changes in remote work from before to after the pandemic once a measure of political partisanship (Democratic vote share in the 2020 presidential election) is included in the model. An increase in 2020 Democratic vote share of one standard deviation (about 9 percentage points) is related to an increase in the likelihood of remote work by 1-2 percentage points and the share of remote work by about 3-5 percent. These effects represent roughly 15-25% of pre-COVID means. These results are robust to the inclusion of not only a rich set of individual controls (e.g., occupational telework potential) but also several different state-level controls, including COVID policy indices, cases and deaths, vaccination rates, and economic performance indicators. We conclude that relative increases in remote work across states that are associated with a higher 2020 Democratic vote share cannot be easily explained by differences in COVID-era policies or outcomes or differences in the nature of jobs across states. |
| JEL: | D72 H73 H75 J22 J24 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32834 |
| By: | Raphael Auer; David Köpfer; Josef Sveda |
| Abstract: | How exposed is the labour market to ever-advancing AI capabilities, to what extent does this substitute human labour, and how will it affect inequality? We address these questions in a simulation of 711 US occupations classified by the importance and level of cognitive skills. We base our simulations on the notion that AI can only perform skills that are within its capabilities and involve computer interaction. At low AI capabilities, 7% of skills are exposed to AI uniformly across the wage spectrum. At moderate and high AI capabilities, 17% and 36% of skills are exposed on average, and up to 45% in the highest wage quartile. Examining complementary versus substitution, we model the impact on side versus core occupational skills. For example, AI capable of bookkeeping helps doctors with administrative work, freeing up time for medical examinations, but risks the jobs of bookkeepers. We find that low AI capabilities complement all workers, as side skills are simpler than core skills. However, as AI capabilities advance, core skills in lower-wage jobs become exposed, threatening substitution and increased inequality. In contrast to the intuitive notion that the rise of AI may harm white-collar workers, we find that those remain safe longer as their core skills are hard to automate. |
| Keywords: | labour market, artificial intelligence, employment, inequality, automation, ChatGPT, GPT, LLM, wage, technology |
| JEL: | E24 E51 G21 G28 J23 J24 M48 O30 O33 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1207 |
| By: | Dalle, Axana (Ghent University); Wybo, Toon (Ghent University); Baert, Stijn (Ghent University); Verhaest, Dieter (KU Leuven) |
| Abstract: | In many countries, age discrimination appears to be driven by negative perceptions that recruiters stereotypically hold about older candidates' technological skills, trainability, and flexibility. Based on human capital, signalling, and screening theories, we hypothesise that training programmes might both compensate for and mitigate these ageist stereotypes and thereby improve these candidates' hiring chances. We test this pathway out of age discrimination by designing a scenario experiment in which professional recruiters assess the recruitability and human capital perceptions of fictitious candidates varying in age and (willingsness for) participation in apprenticeship training at older ages. Our results demonstrate that candidates indicating their (willingness for) participation in such training to obtain relevant work experience are more likely to be recruited than candidates without such experience, regardless of their age. Although apprenticeship training can compensate for age discrimination, it cannot mitigate this as the premium it yields is not higher for older workers. |
| Keywords: | hiring discrimination, older workers, labour market programmes, apprenticeships, signalling, scenario experiment |
| JEL: | J14 J24 J71 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17225 |
| By: | Jirjahn, Uwe (University of Trier); Rienzo, Cinzia (University of Brighton) |
| Abstract: | Working from home reduces real-time visibility of employees within the physical space of the workplace. This makes it difficult to monitor employees' work behavior. Employers may instead monitor employees' outputs and provide incentives through performance pay. The crucial question is what type of performance pay employers provide to incentivize employees who work from home. Using British panel data, we find that working from home decreases the likelihood of solely receiving individual performance pay. It increases the likelihood of receiving collective performance pay – with or without individual performance pay. This pattern also holds in instrumental variable estimations accounting for endogeneity. Our findings fit theoretical considerations. Working from home means that employees have less opportunities to socialize at work entailing the tendency that they focus on personal achievement and neglect collaboration. Solely rewarding individual performance may reinforce this tendency. By contrast, employers reward collective performance as it counteracts the adverse effects of working from home by providing incentives for collaboration, helping on the job and information sharing. |
| Keywords: | remote work, face-to-face interaction, helping on the job, information sharing, individual performance pay, profit sharing |
| JEL: | J22 J33 M50 M52 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17234 |
| By: | Samuel Luethi |
| Abstract: | This study assesses the labour market effects of firm-based (or dual) vocational education and training (VET), i.e. when training takes place in a firm rather than in a school. Using Swiss administrative data, I compare the school-to-work transition between graduates of dual and school-based VET, both of whom have the same curriculum and diploma. To identify the causal effect, I rely on an instrumental variable strategy, using the distance to the nearest full-time VET school as instrument. The empirical analysis shows that dual VET is more effective in securing first employment, especially in occupations with loose labour market conditions as well as for men. However, dual VET graduates are less likely to progress to higher education, suggesting that both forms of VET have a comparative advantage. As for causal channels, heterogeneous results indicate that dual VET is particularly effective in developing noncognitive skills. |
| Keywords: | apprenticeship, school-based VET, school-to-work transition |
| JEL: | J24 I21 J41 C26 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iso:educat:0227 |
| By: | David Neumark; Zeyu Li |
| Abstract: | California has the highest Earned Income Tax (EITC) supplement to the federal EITC, with an 85% supplement rate. However, we find that despite the apparent generosity of the California EITC, there is no employment effect on less-skilled single mothers, in sharp contrast to the evidence of positive extensive margin effects of other state EITC supplements, and of the federal EITC. Our analysis points to two reasons why, unlike other EITCs, California’s EITC does not appear to have an extensive margin effect. First, most states simply supplement the federal EITC by a fixed percentage. In contrast, in California the maximum credit is reached at a much lower income level, the state EITC begins to phase out as soon as the maximum EITC payment is reached (i.e., there is no plateau), and the phase-out rate is as steep as the phase-in rate. The result is a much higher marginal tax rate that sets in at a much lower income level. Second, California has a very high (and rising) minimum wage. The interaction between a high minimum wage and the unique budget constraint created by the California EITC implies that workers who work more than a relatively low number of hours are unlikely to gain any extra income because of the EITC. |
| JEL: | H23 J24 J38 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32883 |
| By: | Joana Elisa Maldonado; Anneleen Vandeplas; Istvan Vanyolos; Mauro Vigani; Alessandro Turrini |
| Abstract: | As the green transition is set to accelerate swiftly over the next decades, its implications for labour markets and workers are of key concern to policymakers. The aim of this paper is to review different methodologies to identify green jobs in cross-country comparable data that are regularly and timely available for EU Member States and assess their usefulness for policy-relevant labour market analysis. Three different methodologies are compared, of which one draws on Eurostat’s environmental accounts (EGSS) data. The two other methodologies use EU Labour Force Survey (LFS) data to implement taskbased approaches. The first task-based approach uses information on occupational task profiles from O*NET data, in line with several other existing studies. The second task-based approach uses a more novel source of information on occupational skills profiles, notably the European Classification of Occupations, Skills and Competences (ESCO). Two out of the three indicators show a rising trend in green jobs over recent years. Sectors such as industry, construction and agriculture account for the bulk of the green jobs; even if the proportion of service jobs among green jobs is on the rise. Green jobs are more likely to be taken up by men than non-green jobs. The geographical and skills distributions of green jobs depend on the methodology used. Based on the presented analysis, the national accounts (EGSS)-based approach seems the most reliable. Nevertheless, given its constraints in terms of opportunities for socioeconomic analysis, it still seems useful to consider other approaches to get at richer insights, while consistently verifying the robustness of results across different methodologies. |
| JEL: | J23 J24 L52 Q28 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:euf:dispap:206 |
| By: | D’Alessandro, Francesco (Università Cattolica del Sacro Cuore); Santarelli, Enrico (University of Bologna); Vivarelli, Marco (Università Cattolica del Sacro Cuore) |
| Abstract: | In this paper we integrate the insights of the Knowledge Spillover Theory of Entrepreneurship and Innovation (KSTE+I) with Schumpeter's idea that innovative entrepreneurs creatively apply available local knowledge, possibly mediated by Marshallian, Jacobian and Porter spillovers. In more detail, in this study we assess the degree of pervasiveness and the level of opportunities brought about by AI technologies by testing the possible correlation between the regional AI knowledge stock and the number of new innovative ventures (that is startups patenting in any technological field in the year of their foundation). Empirically, by focusing on 287 Nuts-2 European regions, we test whether the local AI stock of knowledge exerts an enabling role in fostering innovative entry within AI-related local industries (AI technologies as focused enablers) and within non AI-related local industries, as well (AI technologies as generalised enablers). Results from Negative Binomial fixed-effect and Poisson fixed-effect regressions (controlled for a variety of concurrent drivers of entrepreneurship) reveal that the local AI knowledge stock does promote the spread of innovative startups, so supporting both the KSTE+I approach and the enabling role of AI technologies; however, this relationship is confirmed only with regard to the sole high-tech/AI-related industries. |
| Keywords: | KSTE+I, Artificial Intelligence, innovative entry, enabling technologies |
| JEL: | O33 L26 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17206 |
| By: | Escudero, Veronica (ILO International Labour Organization); Liepmann, Hannah (ILO International Labour Organization); Vergara, Damian (University of Michigan) |
| Abstract: | We leverage rich data from a prominent online job board in Uruguay to assess directed search patterns in job applications, focusing on posted wages and advertised non-wage amenities. We find robust evidence of directed search based on posted wages in the cross-section, with stark heterogeneity by occupation: the wage-application correlation is driven by vacancies attached to lower-skill occupations, with applications to vacancies attached to higher-skill occupations showing no responsiveness to posted wages. By applying text analysis to the job ads, we elicit advertised non-wage amenities and find evidence of directed search based on non-wage amenities. Applications to vacancies attached to lower-skill occupations are consistent with lexicographic application preferences: amenities predict applications to these vacancies only when wages are not posted. Finally, we exploit industry-by-occupation minimum wage variation to demonstrate that the observed occupational heterogeneity in directed search patterns is supported by quasi-experimental difference-in-differences estimates of the impact of wages on job applications. |
| Keywords: | directed search, vacancies, wages, non-wage amenities, minimum wages |
| JEL: | E24 J31 J32 J62 J63 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17211 |
| By: | Liu, Jianan (Renmin University of China); Cai, Hongbo (Beijing Normal University); Lin, Carl (Bucknell University) |
| Abstract: | Competition in the labor market theoretically leads to higher wages, yet empirical evidence to substantiate it, particularly in developing countries, has been sparse. Our study delves into the impact of increased competition in the labor market on workers' wages using a panel dataset from Chinese industrial firms spanning 1998 to 2013. Employing OLS and IV regressions, we demonstrate that a decrease in employer concentration is significantly linked to higher wages. The elasticities of employer concentration on wages fall within the range of -0.034 and -0.107. Additionally, our findings suggest that state-owned enterprises gained the most from this upswing in competition, primarily due to restructuring. Furthermore, we demonstrate that total factor productivity serves as an important channel linking employer concentration to wages. |
| Keywords: | competition, monopsony, labor market concentration, wages, China |
| JEL: | J42 J3 O53 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17226 |
| By: | Geyer, Johannes (DIW Berlin); Haan, Peter (DIW Berlin); Teschner, Mia (IZA) |
| Abstract: | The price for institutional long-term care is a central determinant of the demand for formal and informal long-term care. In this paper, we show how macroeconomic conditions affect these prices. The analysis is based on administrative data that contains rich information on the universe of nursing homes and ambulatory care services and about all recipients of long-term care benefits in Germany. For identification, we exploit variation in macroeconomic conditions measured by the unemployment rate across districts and over time, applying a panel data approach with facility and time fixed effects. Our empirical results show that a higher unemployment rate increases prices for permanent long-term care as well as for prices of accommodation and meals in nursing homes. We provide empirical evidence for the mechanism of these price effects. While we find that employment, working hours, and quality of care in nursing homes are not significantly affected by macroeconomic conditions, our results show that a higher unemployment rate increases the price of nursing homes through a change in the composition of patients: it induces a shift from care recipients with a low degree of impairment to patients with high demands for labor-intensive care. We also document a substitution of low-impairment care from nursing homes toward ambulatory and informal home care. |
| Keywords: | long-term care, nursing home prices, unemployment rate, macroeconomic conditions, informal care |
| JEL: | E32 I11 J20 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17197 |
| By: | Astebro, Thomas B. (HEC Paris); Fossen, Frank M. (University of Nevada, Reno); Gutierrez, Cédric (Bocconi University) |
| Abstract: | Entrepreneurship scholars are interested in understanding and describing how entrepreneurs make decisions under uncertainty, where the probabilities of outcomes are not known but perceived, resulting in ambiguous probabilities. In this context, ambiguity refers to the lack of precise and objective probability assessments and the presence of subjective judgments regarding potential outcomes. In this chapter, we discuss the development of thought on how entrepreneurs perceive and react to uncertainty from Frank Knight (1921) to the present day. Recognizing that entrepreneurs face uncertainty rather than risk and are unlikely to have estimates of all probabilities for all potential outcomes, it becomes difficult to accept Expected Utility Theory (EUT), developed by Savage (1951) and von Neumann and Morgenstern (1953), as a relevant model for entrepreneurial decision-making. We examine a range of decision theories, ranking them in an order starting from EUT and proceeding to the most structure-free models of entrepreneurial choice, allowing for comparisons and contrasts of the main components and underlying concepts as they apply to entrepreneurial decision making. |
| Keywords: | entrepreneurship, uncertainty, ambiguity, decision theory, Bayesian Entrepreneurship |
| JEL: | L26 J24 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17231 |
| By: | Autor, David (MIT); Dorn, David (University of Zurich); Hanson, Gordon H. (Harvard University) |
| Abstract: | Previous research finds that the greater geographic mobility of foreign than native-born workers facilitates labor market adjustment to shifting regional economic conditions. We examine immigration's role in enabling U.S. commuting zones to respond to manufacturing job loss caused by import competition from China. Although foreign-born population headcounts fell by a larger proportion than those of the native-born in trade-exposed regions, the contribution of immigration to labor market adjustment in this episode was small. Because most U.S. immigrants arrived in the country after manufacturing regions were already mature, few took jobs in industries that later saw import surges. The foreign-born population share in regions with high trade exposure was only three-fifths that in regions with low exposure. Immigration may do more to aid adjustment to cyclical shocks, in which job loss follows recent hiring booms, than to aid adjustment to secular decline, in which hiring booms occurred longer ago. |
| Keywords: | immigration, import competition, geographic labor mobility, manufacturing decline, job loss |
| JEL: | E24 F14 F16 J23 J31 L60 O47 R12 R23 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17213 |
| By: | Ying Liang |
| Abstract: | This paper evaluates the impact of the German minimum wage policy on firms' financial leverage. By using a comprehensive firm-establishment-employee linked dataset and a difference-in-differences estimation with firm-level variation in treatment intensity, the analysis shows that the average minimum wage level reduces firms' financial leverage by about 0.5 to 0.9 percentage points, corresponding to 1 to 2 percent of the mean of financial leverage. Further investigation of the mechanism shows that the minimum wage does not lead to significant capital-labor substitution; therefore, the labor share increases. Firms react to the increased labor share by deleveraging. The results suggest that while the minimum wage benefits workers by allocating more earnings to the labor force, it also introduces greater operating risks and encourages conservative financial behavior among firms. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.03659 |
| By: | Michael R. Richards; Maggie Shi; Christopher M. Whaley |
| Abstract: | Private equity (PE) plays an increasingly important role in the modern US economy. However, its impacts on owned-firms are incompletely understood. We exploit a historically large leveraged buyout of a national hospital chain to examine how the full life cycle of PE influences hospital-level revenues, technology sourcing, labor use, and financial performance. We find permanent improvements in hospital volumes and revenues. PE also reduces growth in full-time employees, with a suggestive partial substitution toward part-time workers. Technology adoption is restrained, but the number of vendors expands. Overall, PE has nuanced effects on hospital management, which translate to improved operating margins. |
| JEL: | I11 I18 L20 L24 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32840 |
| By: | Harju, Jarkko; Juuti, Toni; Matikka, Tuomas |
| Abstract: | Using full-population data from Finland, we show that individuals at the top of the income distribution are significantly more likely to start new incorporated businesses compared to others. There is no similar selection based on parental income, but more than half of new entrepreneurs have entrepreneurial parents. Individual income gains from entrepreneurship are similar across different background characteristics, but parental entrepreneurship and personal income are positively linked to key firm-level outcomes such as productivity and job creation. This highlights the importance of the intergenerational transmission of entrepreneurial skills and suggests that businesses established by high-income individuals generate largest positive spillovers. |
| Keywords: | entrepreneurship, income mobility, inequality, productivity, Social security, taxation and inequality, Business taxation and regulation, L26, J24, J3, fi=Tulonjako ja eriarvoisuus|sv=Inkomstfördelning och ojämlikhet|en=Income distribution and inequality|, |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:fer:wpaper:168 |
| By: | Grant Miller; Debashish Biswas; Aprajit Mahajan; Kimberly Singer Babiarz; Nina R. Brooks; Jessie Brunner; Sania Ashraf; Jack Shane; Sameer Maithel; Shoeb Ahmed; Moogdho Mahzab; Mohammad Rofi Uddin; Mahbubur Rahman; Stephen P. Luby |
| Abstract: | Globally, coercive labor (i.e., forced, bonded, and/or trafficked labor) and child labor are disproportionately prevalent in environments with weak regulatory enforcement and state capacity. Effective strategies for addressing them may therefore need to align with the private incentives of business owners, not relying on government action alone. Recognizing this, we test a ‘business case’ for improving work conditions and promoting human rights using a randomized controlled trial across nearly 300 brick kilns in Bangladesh. Among study kilns, rates of coercive and child labor are high: about 50% of sampled workers are trafficked, and about 70% of kilns use child labor. Our experiment introduced a production method that increased kiln productivity and revenue, and we test if these productivity gains in turn increase worker “compensation” (including better work conditions). Because adoption of the method requires important changes in worker routines, we also test if providing information to kiln owners about positively incentivizing workers to enhance adoption (and hence business revenue) can lead to better work conditions. We find no evidence that productivity gains alone reduced labor trafficking or child labor, but adding the information intervention reduced child labor by 25-30% without reducing revenue or increasing costs. |
| JEL: | J28 J39 J46 J49 J59 J81 J83 O17 O53 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32829 |
| By: | Finamor, Lucas |
| Abstract: | In labor markets with substantial informality, distinct working arrangements offer different prospects for workers. Formal employment provides insurance programs requiring social security contributions and taxes. Informal and self-employment lack public insurance to mitigate risk but offer valuable routes out of unemployment. Workers face complex tradeoffs involving present and future risks, the ability to insure them, liquidity, and earnings. To investigate this question, I develop a life-cycle model of employment type and savings in a frictional search environment. I estimate the model using linked longitudinal survey and administrative Chilean data, exploiting policy reforms. The estimates suggest that formal sector insurance is valued; informal workers would be willing to forgo earnings to be formal employees. Informal opportunities also provide substantial insurance against unemployment risk. Exploring counterfactual policies, I show how the insurance values can be interpreted as summary measures of the attractiveness of these sectors given the policy and labor market environment. |
| Keywords: | Labor market informality, unemployment insurance, social security |
| JEL: | D14 J26 J46 J64 |
| Date: | 2024–08–08 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121662 |
| By: | Yann Decressin; Steven N. Kaplan; Morten Sorensen |
| Abstract: | Using more than 4, 900 assessments, we study changes in the characteristics and objectives of CEOs and top executives since 2001. The same four factors explain roughly half of the variation of assessed CEO characteristics in this larger sample of executive assessments as in Kaplan and Sorensen (2021). After the global financial crisis (GFC), the average interviewed CEO candidate has lower overall ability, is more execution oriented / less interpersonal, less charismatic and less creative/strategic than pre-GFC. Except for overall ability and execution oriented/interpersonal, these differences persist in hired CEOs. Interpersonal or “softer” skills do not increase over time, either for CEO candidates or hired CEOs. Pre- and post-GFC, we find a positive correlation between the ability of assessed CEOs and other C-level executives assessed at the same company, suggesting that higher-ability executives complement each other. Finally, we look at the relation between the objectives for which the CEOs are interviewed and CEO characteristics. |
| JEL: | G3 J4 M5 M51 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32854 |
| By: | Acabbi, Edoardo (Universidad Carlos III de Madrid); Alati, Andrea (Bank of England); Mazzone, Luca (International Monetary Fund) |
| Abstract: | Using administrative data, we document that workers acquire more human capital at more productive firms. Recessions distort workers-firm sorting, flatten the job ladder and impact human capital accumulation, as workers match on average to worse firms. To quantify the aggregate relevance of these effects, we build a directed search model with aggregate risk and worker-firm heterogeneity, in which human capital accumulation depends on firm quality. We estimate the model and show that recessions have persistent negative effects on the productivity of worker-firm matches, with distortions in sorting and human capital accumulation accounting for approximately 30% of cumulative output losses. |
| Keywords: | Human capital accumulation; hysteresis; sorting; scarring |
| JEL: | E24 E32 J24 J63 |
| Date: | 2024–08–05 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:1077 |
| By: | Balleer, Almut; Merz, Monika; Papp, Tamás K. |
| Abstract: | We study the role of heterogeneous preferences at the spousal level and that of spousal mutual insurance against wage shocks for couples' labor supply in a time-use model. We estimate the model for couples in the German Time-Use Survey with Bayesian techniques and generate gender-specific wage-elasticities of market hours in the cross-section and for all couples. Missing mutual insurance ignores males' behavior which we find to be substantial. Together with preference heterogeneity it shapes the elasticities' size and distribution, especially for high and low hours worked and wage groups. Our setting is suitable to analyze nonlinear and distributional economic policy. |
| Abstract: | Wir untersuchen die Rolle heterogener Präferenzen sowie der gegenseitigen Versicherung im Gegensatz zu Lohnveränderungen für die Zeitverwendung und das Arbeitsangebot von Paaren. Wir stellen ein Zeitverwendungsmodell auf, das wir anhand Bayesianischer Methoden für Paare in der der deutschen Zeitbudgeterhebung schätzen. Anhand der Schätzergebnisse generieren wir geschlechtsspezifische Lohnelastizitäten der Arbeitsstunden im Querschnitt und für alle Paare. Vernachlässigt man eine gegenseitige Versicherung, kann das Arbeitsangebotsverhalten der Männer nur unzureichend erklärt werden. Zusammen mit der Präferenzheterogenität prägt sie die Größe und Verteilung der Elastizitäten insgesamt und insbesondere für hohe und niedrige Arbeitsstunden und Lohngruppen. Unser Szenario eignet sich für die Analyse von nichtlinearer und verteilungsorientierter Wirtschaftspolitik. |
| Keywords: | Preference heterogeneity, spousal labor supply, Bayesian estimation, Marshallian wage elasticity |
| JEL: | D13 E24 J22 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:rwirep:301861 |
| By: | Luca Salerno; Axel H. Börsch-Supan; Diana López-Falcón; Johannes Rausch |
| Abstract: | The COVID-19 pandemic led to significant economic disruptions, prompting many governments to implement short-time employment aid (STEA) to mitigate job losses and income reductions. This study examines the effectiveness of STEA in the short and long term in Europe among workers aged 50 and older, a part of the population that was especially threatened by the disease. Using data from the Survey of Health, Ageing and Retirement in Europe (SHARE), we analyze the impact of STEA on employment status, working hours, and income during and after the pandemic. STEA was widespread in Europe. Our findings indicate that the use of STEA was in general reasonably targeted and may have helped its recipients to avoid even worse economic losses during the pandemic, especially after a learning process from 2020 to 2021. However, STEA may have led to increased employment instability in the longer run. Specifically, recipients of STEA were more likely to experience unemployment or furloughs post-pandemic. These results highlight the importance of designing STEA policies that not only provide immediate economic relief but also support sustainable employment and economic resilience. |
| JEL: | H52 J20 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32760 |
| By: | Sasaki, Hiroaki; Mizutani, Aya |
| Abstract: | In contemporary Japan, the realization of a virtuous cycle of growth and distribution (i.e., how the "new form of capitalism" should be) has been discussed. To examine the validity of economic policies suggested by the new form of capitalism, we present a Kaleckian model that considers the wage gap among workers and the retained earnings of firms, and investigate the effects of minimum wage, the rate of retained earnings, and profit sharing on growth and distribution. We reveal that a decrease in the rate of retained earnings and an increase in profit sharing do not lead to a virtuous cycle of growth and distribution, whereas a rise in the minimum wage increases the income share of workers and the economic growth rate. However, an increase in the minimum wage has a negative impact on employment, whereas a decline in the rate of retained earnings and an expansion of profit sharing have a positive effect. |
| Keywords: | growth and distribution; Kaleckian model; minimum wage; retained earnings; profit sharing; Japan's new form of capitalism |
| JEL: | E12 E25 J31 J53 |
| Date: | 2024–08–12 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121692 |
| By: | Carycruz Bueno (Department of Economics, Wesleyan University); Tim R. Sass (Department of Economics, Georgia State University) |
| Abstract: | Traditionally, teacher salaries have been determined solely by experience and educational attainment. This has led to chronic shortages of teachers in particular subject areas, such as math, science, and special education. There is a small literature which finds that bonuses and loan forgiveness can ameliorate subject- specific teacher shortages by substantially increasing retention of teachers in such “high-need” subjects. In contrast to prior work, we find that Georgia’s bonus system for early-career math and science teachers has not increased teacher retention in these subject areas. The lack of efficacy can be traced to four key elements of the design and implementation of Georgia’s bonus system: uncertainty in program funding, ex-post payments that are not conditional on future employment, an eligibility cap based on years of experience, and poor communication about the program to teachers. Our findings demonstrate the need to carefully design and implement bonus systems to achieve the potential benefits of differential pay structures. |
| Keywords: | STEM teacher shortages, teacher bonus pay, teacher recruitment and retention |
| JEL: | I21 I28 J20 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:wes:weswpa:2024-010 |
| By: | Churchill, Sefa Awaworyi (RMIT University); Chang, Simon (University of Western Australia); Smyth, Russell (Monash University); Trinh, Trong-Anh (World Bank) |
| Abstract: | This paper extends prior theory linking present-day sex ratios to present-day propensity for entrepreneurship among men backward in time to explore the long-run gender origins of entrepreneurship. We argue that present-day propensity for entrepreneurship among men will be higher in neighbourhoods which had historically high sex ratios. We propose that high sex ratios generate attitudes and behaviours that imprint into cultural norms about gender roles and that vertical transmission within families create hysteresis in the evolution of these gender norms. To empirically test the theory, we employ the transport of convicts to the British colonies of New South Wales and Van Diemen's Land in the eighteenth and nineteenth centuries as a natural experiment to examine the long-run effect of gender norms on entrepreneurship in present-day Australia. We use a representative longitudinal dataset for the Australian population that provides information on the neighbourhood in which the participant lives, which we merge with data on the sex ratio in historical counties from the mid-nineteenth century. We find that men who live in neighbourhoods which had high historical sex ratios have a higher propensity for entrepreneurship. We present evidence consistent with the vertical transmission of gender norms within families being the likely mechanism. Arguments for policies to promote female entrepreneurship are typically couched in terms of gender norms representing a barrier to more women starting their own business. We present evidence consistent with gender norms contributing to gender differences in rates of entrepreneurship by being a spur for higher male entrepreneurship rather than a barrier to female entrepreneurship. |
| Keywords: | gender norms, sex ratios, entrepreneurship, Australia |
| JEL: | I31 J21 J22 N37 O10 Z13 Z18 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17170 |
| By: | Miller, Anne |
| Abstract: | Two propositions are required to introduce separate needs into utility theory. Firstly, the shape of the utility function must represent the different stages of fulfilment of a need as experienced by a consumer: deprivation, subsistence, sufficiency, satiation, surfeit. The second proposes weak separability for the utilities of commodities fulfilling the same need, and strong separability for different needs. A utility function, formed from the addition of two leaning-S-shaped, bounded cardinal utilities with satiation at infinity, is used to create an indifference curve map. Functional forms for the leisure-consumption choice are derived and their diagrams drawn – labour supply, consumption demand and their Engels curves. The main outcomes are: * Concave- and convex-to-the-origin indifference curves, (the former defining ‘dysfunctional poverty), are separated by a straight-line indifference curve, BA, (the slope of which is defined by relative-intensities-of-need), identifiable as an absolute poverty line. It leads to disequilibrium in the derived functional forms. * Each commodity responds as superior, inferior and even Giffen, in different areas of the convex-to-the-origin indifference curves. Their boundaries are reflected in envelope curves in the derived functional form diagrams. * An individual’s labour supply responses vary markedly according to three levels of unearned consumption/income, representing dysfunctional poverty (involuntary unemployment), functional poverty (working, but deprived of either leisure or consumption) and sufficiency. * The reservation wage is a U-shaped function of endowments of unearned consumption. The functional form’s parameters have meaningful psychological interpretations. The concept of separate needs in utility offers a new dimension in labour supply theory. |
| Keywords: | leaning-S-shaped utility, additive utilities, absolute poverty line, disequilibrium, Giffen good, envelope curve, involuntary unemployment, functional poverty, reservation wage |
| JEL: | D11 J22 |
| Date: | 2024–08–02 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121671 |
| By: | Gilberto Tadeu Lima; Laura Barbosa de Carvalho; Gustavo Pereira Serra |
| Abstract: | This paper sets forth two macrodynamic models of capacity utilization and output growth with human capital formation having a positive impact on labor productivity. Human capital formation is costly, however, and two financing mechanisms are considered, one in each model. In the first model, public investment in human capital is financed by some part of income tax revenues, configuring a further source of aggregate demand in addition to private consumption, government consumption, and private investment in physical capital. The second model features public investment in human capital formation financed by all income tax revenues supplemented by workers’ own investment in human capital financed through debt. Hence public and private investment in human capital configure further sources of aggregate demand formation, together with private consumption and investment in physical capital. Analogously to firms’ desired investment in physical capital, workers’ desired investment in human capital is independent from saving out of current income. The excess of workers’ desired investment in human capital formation over the public investment in human capital is financed through debt made available by an endogenous supply of credit money. Although this second model is not intended to describe specifically debt-financed human capital formation through student loans, it incorporates some features of the U.S. experience with student debt such as a fixed interest rate and income-based repayment. |
| Keywords: | Human capital; household debt; capacity utilization; employment rate; output growth |
| JEL: | E12 E22 E24 J24 |
| Date: | 2024–08–27 |
| URL: | https://d.repec.org/n?u=RePEc:spa:wpaper:2024wpecon23 |