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on Labor Markets - Supply, Demand, and Wages |
| By: | Busso, Matias (Inter-American Development Bank); Montaño, Sebastián (University of Maryland); Muñoz-Morales, Juan S. (IÉSEG School of Management) |
| Abstract: | Using longitudinal data of college graduates in Colombia, we estimate labor market returns to postsecondary degrees and to various skills—including literacy, numeracy, foreign language, and field-specific skills. Graduates of academic programs and schools of higher reputation obtain higher earnings relative to vocational public programs. A one standard deviation increase in each skill predicts average earnings increases of one to three percent. Returns vary along the earnings distribution, with tenure, with the degree of job specialization, and by gender. Our results imply that degrees and skills capture different human capital components that are rewarded differently in the labor market. |
| Keywords: | returns to skills, returns to education, numeracy, literacy, foreign language, field-specific, Colombia |
| JEL: | I20 I24 J24 J31 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17283 |
| By: | Alexander Bick; Adam Blandin; Richard Rogerson |
| Abstract: | We document large differences in lifetime hours of work using data from the NLSY79 and argue that these differences are an important source of inequality in lifetime earnings. To establish this we develop and calibrate a rich heterogeneous agent model of labor supply and human capital accumulation that allows for heterogeneity in preferences for work, initial human capital and learning ability, as well as idiosyncratic shocks to human capital throughout the life-cycle. Our calibrated model implies that almost 20 percent of the variance in lifetime earnings is accounted for by differences in lifetime hours of work, with 90 percent of this effect due to heterogeneity in preferences. Higher lifetime hours contribute to lifetime earnings via two channels: a direct channel (more hours spent in production at given productivity) and a human capital channel (more hours spent investing in human capital, which increases future productivity). Between a third and a half of the effect of lifetime hours on lifetime earnings is due to the human capital channel. Our model implies that policies that limit long hours have important effects on both the mean and variance of lifetime earnings. |
| JEL: | D15 E20 J22 J24 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32997 |
| By: | Erik Engberg (Orebro University); Holger Gorg (Kiel Institute for the World Economy); Magnus Lodefalk (Örebro University); Farrukh Javed; Martin Langkvist; Natalia Monteiro; Hildegunn Nordas; Giuseppe Pulito (Rockwool Foundation Berlin); Sarah Schroeder (Aarhus University); Aili Tang (Örebro University) |
| Abstract: | We unbox developments in artificial intelligence (AI) to estimate how exposure to these developments affect firm-level labour demand, using detailed register data from Denmark, Portugal and Sweden over two decades. Based on data on AI capabilities and occupational work content, we develop and validate a time-variant measure for occupational exposure to AI across subdomains of AI, such as language modelling. According to the model, white collar occupations are most exposed to AI, and especially white collar work that entails relatively little social interaction. We illustrate its usefulness by applying it to near-universal data on firms and individuals from Sweden, Denmark, and Portugal, and estimating firm labour demand regressions. We find a positive (negative) association between AI exposure and labour demand for high-skilled white (blue) collar work. Overall, there is an up-skilling effect, with the share of white-collar to blue collar workers increasing with AI exposure. Exposure to AI within the subdomains of image and language are positively (negatively) linked to demand for high-skilled white collar (blue collar) work, whereas other AI-areas are heterogeneously linked to groupsof workers. |
| Keywords: | Artificial intelligence; Labour demand; Multi-country firm-level evidence |
| JEL: | E24 J23 J24 N34 O33 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2414 |
| By: | Priyaranjan Jha; David Neumark; Antonio Rodriguez-Lopez |
| Abstract: | Dube, Lester, and Reich (2010) argue that state-level minimum wage variation correlated with economic shocks generates spurious evidence that higher minimum wages reduce employment. Using minimum wage variation within contiguous county pairs sharing a state border, they find no relationship between minimum wages and employment in the U.S. restaurant industry. Using the same research design, we show that this result is overturned if we use instead multi-state commuting zones, which provide superior definitions of local economic areas. These contrasting results are explained by a positive bias in the county-pair specification when using pairs formed by counties from different commuting zones. |
| JEL: | J23 J38 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32901 |
| By: | Francesco Amodio (McGill University); Pamela Medina (University of Toronto); Monica Morlacco (University of Southern California) |
| Abstract: | This paper shows that self-employment shapes labor market power in low-income countries, affecting industrial development. Using Peruvian data, we show that wage-setting power increases with concentration, but less so where self-employment is more prevalent. A general equilibrium model shows that while concentration increases oligopsony power, it also raises labor supply elasticity by pushing workers into self-employment, thereby mitigating labor market power. Conversely, pro-competitive policies that draw workers into salaried jobs may increase labor market power, with limited overall impact. We demonstrate that these policies are only effective if they tackle labor market power. |
| Keywords: | labor market power, monopsony, self-employment, sorting, development |
| JEL: | J2 J3 J42 L10 O14 O54 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2418 |
| By: | Alexander Bick; Adam Blandin; David J. Deming |
| Abstract: | Generative Artificial Intelligence (AI) is a potentially important new technology, but its impact on the economy depends on the speed and intensity of adoption. This paper reports results from the first nationally representative U.S. survey of generative AI adoption at work and at home. In August 2024, 39 percent of the U.S. population age 18-64 used generative AI. More than 24 percent of workers used it at least once in the week prior to being surveyed, and nearly one in nine used it every workday. Historical data on usage and mass-market product launches suggest that U.S. adoption of generative AI has been faster than adoption of the personal computer and the internet. Generative AI is a general purpose technology, in the sense that it is used in a wide range of occupations and job tasks at work and at home. |
| JEL: | J24 O33 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32966 |
| By: | Fang, Tony (Memorial University of Newfoundland); Hsu, Mei (National Taiwan University); Lin, Carl (Bucknell University) |
| Abstract: | Using data from 1980, 1990, and 2000 U.S. censuses, as well as the 2010 and 2019 American Community Surveys and the 1993–2019 National Survey of College Graduates, we investigate the performance of Chinese immigrants in the U.S. labor market over the past 40 years since China initiated its economic reforms and open-door policy in 1978. The results indicate that by 1990, Chinese immigrants' earnings surpassed those of immigrants from other countries, and by 2010, they exceeded the earnings of U.S.-born workers. Our Oaxaca-Blinder and Quantile decomposition analyses suggest that a significant portion of the earnings advantage held by Chinese immigrants, compared to other immigrant groups and U.S.-born workers over time, can be attributed to differences in observable characteristics, with education being the most crucial factor, both at the mean and across the earnings distribution. By employing national surveys that provide data on college graduates, we demonstrate that attaining the highest degree earned in the U.S. is associated with higher earnings for Chinese immigrants compared to all other immigrants. Furthermore, the difference in returns to U.S.-earned highest degrees can account for this earnings advantage. |
| Keywords: | immigration, China, the U.S., economic assimilation, Oaxaca-Blinder decomposition, quantile decomposition |
| JEL: | J31 J61 J24 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17251 |
| By: | Christophe André; Peter Gal |
| Abstract: | This review takes stock of the large body of evidence on aggregate productivity growth, its structural drivers, and the role of a wide range of policies. It aims to synthesise evidence on how public policies can promote productivity through their impacts on both the incentives and the capabilities of businesses and workers, taking account of different specificities of firms at the frontier and below, and integrating complementarities across policy areas. It also identifies gaps in knowledge, thus offering potential directions for future work. |
| Keywords: | Economic policy, Efficiency frontier, Entrepreneurship, Firm Performance, Intangible capital, Investment, Productivity, Technological diffusion |
| JEL: | D24 E22 E24 E6 J24 L25 L26 L5 O31 O32 O33 O38 O47 |
| Date: | 2024–10–07 |
| URL: | https://d.repec.org/n?u=RePEc:oec:ecoaaa:1822-en |
| By: | Cygan-Rehm, Kamila (Dresden University of Technology) |
| Abstract: | This study estimates the lifetime effects of lost classroom instruction on labor market performance. For identification, I use historical shifts in the school year schedule in Germany, which substantially shortened the duration of the affected school years without adjusting the core curriculum. The loss of classroom instruction was mainly compensated for by assigning additional homework. Applying a difference-in-differences design to social security records, I find adverse effects of the policy on earnings and employment over almost the entire occupational career. Plausible mechanisms behind the deteriorated labor market outcomes include unfavorable effects on human capital and a differential occupational sorting. |
| Keywords: | instructional time, education, earnings, skills, Germany |
| JEL: | I21 I26 J24 J17 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17253 |
| By: | Hollandt, Nils Torben (Halle Institute for Economic Research); Müller, Steffen (IWH Halle) |
| Abstract: | Wage mobility reduces the persistence of wage inequality. We develop a framework to quantify the contribution of employer-to-employer movers to aggregate wage mobility. Using three decades of German social security data, we find that inequality increased while aggregate wage mobility decreased. Employer-to-employer movers exhibit higher wage mobility, mainly due to changes in employer wage premia at job change. The massive structural changes following German unification temporarily led to a high number of movers, which in turn boosted aggregate wage mobility. Wage mobility is much lower at the bottom of the wage distribution, and the decline in aggregate wage mobility since the 1980s is concentrated there. The overall decline can be mostly attributed to a reduction in wage mobility per mover, which is due to a compositional shift toward lower-wage movers. |
| Keywords: | wage mobility, wage inequality, wage premiums, inequality persistence, employer changes, german linked-employer-employee data, business dynamism |
| JEL: | J30 J31 J62 D63 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17259 |
| By: | Bartelsman, Eric (Vrije Universiteit Amsterdam); Dobbelaere, Sabien (Vrije Universiteit Amsterdam); Mattioli, Alessandro Zona (Vrije Universiteit Amsterdam) |
| Abstract: | This paper provides evidence from a natural experiment on the importance of workers' tacit knowledge about firms' intangible assets for competition in product and labor markets. Evidence is presented on product and labor market imperfections across manufacturing and services firms in the Netherlands. Price-cost markups and wage markups are both shown to be positively related to intangible intensity at the firm level. A model is developed of the processes of intangible investment and wage bargaining of heterogeneous firms, providing a mechanism that relates workers' tacit knowledge to firm-level product and labor market imperfections. The model also incorporates a role for non-compete agreements (NCAs) limiting worker mobility. Our main empirical contribution comes from using linked employer-employee panel data with information on NCAs and changes in enforceability of these agreements. Using an event-study framework, we demonstrate that the removal of NCAs leads to higher wages and worker mobility, especially for workers in intangible-intensive firms. We find that NCAs affect workers across the skill distribution. The causal findings from changes in the legality of NCAs correspond with the mechanism described in the model. |
| Keywords: | price-cost markups, rent sharing, technology, tacit knowledge, non-compete agreements |
| JEL: | J41 L10 M52 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17260 |
| By: | Kyle Greenberg; Matthew Gudgeon; Adam Isen; Corbin L. Miller; Richard W. Patterson |
| Abstract: | This paper estimates causal intergenerational occupation transmission in the military using discontinuities in parents' eligibility for service from the Armed Forces Qualification Test. A parent's enlistment in the Army increases their children’s military service propensity by between 58% and 110%. Intergenerational occupational transmission rates vary by race and sex---they are highest for demographic groups whose parents gained the most economically from service and for same-sex parent-child pairs. Our findings provide new evidence on the mechanisms driving intergenerational occupation correlations and show that intergenerational transmission is an important channel for getting under-represented groups into high-quality occupations. |
| JEL: | H56 J24 J45 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33009 |
| By: | Stella Martin; Kevin Stabenow; Mark Trede |
| Abstract: | This paper investigates the statistical properties of measurement error in earnings with a linked panel of a survey and administrative information from pension records. We can replicate central properties from previous literature like mean reversion and extend insights on longitudinal features with our decade-long panel. Central correlates in the decomposition of measurement error are gender, features related to the individual labor market biography and the individual position in the income distribution, where under-/overreporting of earnings is especially prevalent above/below the median. |
| Keywords: | measurement error, earnings, survey data, administrative data, record linkage |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:cqe:wpaper:10824 |
| By: | Patrinos, Harry Anthony (University of Arkansas, Fayetteville); Rivera-Olvera, Angelica (World Bank) |
| Abstract: | This paper examines the effects of the COVID-19 pandemic on the returns to education in the United States. Using data from the Current Population Survey 2011-2022, the analysis reveals that, after a period of decline, returns to education increased significantly because of COVID, particularly for men and those with university education. The returns to university for men increased by 1 percentage points. The results underscore the importance of continued investment in education to mitigate the adverse effects of future crises. |
| Keywords: | pandemics, human capital, returns to education, labor markets, COVID-19 |
| JEL: | E24 J11 J17 J31 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17313 |
| By: | Arindrajit Dube; Ben Zipperer |
| Abstract: | The own-wage elasticity (OWE) of employment estimated using minimum wage increases provides an economically meaningful measure of the policy on jobs. We discuss how to interpret the magnitude of the OWE, including in terms of welfare and under alternative models of the labor market. We present a comprehensive set of OWE estimates from 88 studies and introduce an regularly updated repository of the estimates---https://economic.github.io/owe---an up-to-date snapshot of the existing literature for scholars and policymakers. We find that most studies to date suggest a fairly modest impact of minimum wages on jobs: the median OWE estimate of 72 studies published in academic journals is -0.13, which suggests that only around 13 percent of the potential earnings gains from minimum wage increases are offset due to associated job losses. Estimates published since 2010 tend to be closer to zero. |
| JEL: | J0 J2 J88 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32925 |
| By: | Fabiano, Gianluca; Bustamante, Juana Paola; Codjia, Laurence; Siyam, Amani; Zurn, Pascal |
| Abstract: | Introduction: The World Health Report 2006 defined 'availability', 'competence', 'responsiveness' and 'productivity' as the key dimensions of the health workforce (HWF) performance framework. Since then, new goals have been set to address population health needs by optimizing HWF performance and quality. The aim of this scoping review is to identify aspects of HWF performance dimensions that have emerged since the 2006 publication. Methods: A scoping review of the literature was performed to establish the knowledge base on HWF performance via the latest available evidence. The web search was conducted on the Science and MEDLINE databases, with Scholar citations from the World Health Report 2006. Results: The literature reveals new thematic areas in HWF performance that were not explicit in the 2006 framework, eg the role of retention and recruitment policies on HWF availability and broadening competence by incorporating HW cultural background, attitudes and values alongside technical skills. Concepts related to HWF responsiveness have expanded to include job quality and work environment. A shift in productivity emphasises the role of technologies in enhancing clinical practice and overall system efficiency. Last, recurring aspects of performance were related to pay schemes and such contextual factors as the role of communities and regulatory frameworks. Conclusions: This review lays the groundwork for a revised perspective on HWF performance, transitioning from separate dimensions to a more integrated approach. It highlights the importance of expanding the availability dimension to emphasise the role of personal and career development and alignment with individual values. Knowledge, technical skills, attitudes, behaviours, beliefs and cultural background all influence competence. Responsiveness is seen through a lens valuing health worker well-being. Conceptually, productivity is broadened to reflect a more nuanced understanding of efficiency, recognizing the role of technology, how work environment and teams impact performance, and the significance of remuneration, including financial and non-financial incentives and other contextual factors. |
| Keywords: | performance, productivity, retention, health workforce, health |
| JEL: | I18 J08 J24 J24 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1492 |
| By: | Cesar Luis Garro-Marin; Shulamit Kahn; Kevin Lang |
| Abstract: | Do elite universities overpay their faculty? Not if you believe the AKM model. However, although the AKM model fits well, it is unlikely to be the right interpretation in this case. |
| JEL: | J01 J31 J44 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33005 |
| By: | Yan Bai; Dan Lu; Hanxi Wang |
| Abstract: | We provide a general formula for optimal unilateral policies in multi-sector, general-equilibrium Ricardian models with various widely adopted labor market specifications. Sector-specific tariffs are summarized by a matrix of partial supply elasticities and the share of Home’s import in foreign incomes, reflecting Home’s import market power. Sector-specific export taxes depend on trade elasticities and Home’s market share in foreign consumption, reflecting Home’s export market power. Home imposes higher tariffs or export taxes on sectors with larger market powers. We apply the general formula to specific cases: perfectly mobile labor, imperfectly mobile labor across sectors, Ricardian-Roy models, and inefficient labor markets. |
| JEL: | F13 F16 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32919 |
| By: | Alexander Ahammer; Gerald J. Pruckner; Flora Stiftinger |
| Abstract: | We estimate the long-run labor market and health effects of breast cancer among Austrian women. Compared to a random sample of same-aged non-affected women, those diagnosed with breast cancer face a 22.8 percent increase in health expenses, 6.2 percent lower employment, and a wage penalty of 15 percent five years after diagnosis. Although affected women sort into higher quality jobs post-diagnosis, this is offset by a reduction in working hours. We argue that the hours reduction is more likely driven by an increase in the time preference rate, meaning that patients increasingly value the present over the future, rather than by an incapacitation effect or employer discrimination. |
| Keywords: | Breast cancer, labor supply, health shocks, time discounting |
| JEL: | I10 J22 I12 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:jku:econwp:2024-09 |
| By: | Timo Boppart; Per Krusell; Jonna Olsson |
| Abstract: | A production efficiency perspective naturally leads to the prescription that more productive individuals should work more than less productive individuals. Yet, systematic differences in actual hours worked across high- and low-wage individuals are barely noticeable. We highlight that the insurance available to households is an important determinant behind this fact. Using a dynamic heterogeneous-agent model with insurance frictions, income effects calibrated to match aggregate hours across time and space, and financial frictions that deliver realistic wealth dispersion, we report stark effects of insurance: perfect insurance would raise aggregate labor productivity by 9.6 percent and decrease hours worked by 7.7 percent. |
| JEL: | E0 E2 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32977 |
| By: | Alessandra Fenizia; Tom Kirchmaier |
| Abstract: | This paper studies whether working from home (WFH) affects workers' performance in public sector jobs. Studying public sector initiatives allows us to establish baseline estimates on the impact of WFH net of incentives. Exploiting novel administrative data and plausibly exogenous variation in work location, we find that WFH increases productivity by 12%. These productivity gains are primarily driven by reduced distractions. They are not explained by differences in quality, shift length, or task allocation. The productivity gains more than double when tasks are assigned by the supervisor. |
| Keywords: | working from home, productivity, public sector |
| Date: | 2024–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2036 |
| By: | Carrasco Perea, Raquel; Jerez García-Vaquero, María Belén |
| Abstract: | The triangular employment relationship between outsourced workers, intermediary employers, and user firms has received limited theoretical attention. This paper seeks to address this gap by focusing on temporary agency work. We develop a two-period labor search model in which firms can create jobs directly or through a temporary work agency (TWA). In both instances, match quality depends on unobservable attributes of workers and job vacancies. The agency acts as a matchmaker, providing flexibility by spreading termination risks across firms and certifying assignment quality through worker screening. However, worker poaching by user firms reduces the returns on the agency's investments in recruitment and screening. This hold-up problem leads to inefficient assignments, prolonged TWA employment spells, and insufficient job creation. As in the data, TWA employment is more relevant for less skilled workers. We also find that these workers are more likely to be trapped in inefficient assignments. The distortions affecting agency workers are more severe when wages in direct-hire jobs are set through Nash bargaining rather than directed search. Although the hold-up problem in our model can be solved with transfers from poaching clients to the agency, such transfers are illegal in most EU countries.The paper concludes by presenting simulations and using Spanish data to validate the theoretical framework. |
| Keywords: | Temporary agency work; Intermediation; Search and matching; Screening; Efficiency |
| JEL: | J20 J42 D58 D61 |
| Date: | 2024–09–27 |
| URL: | https://d.repec.org/n?u=RePEc:cte:werepe:44503 |
| By: | Margarita Pavlova |
| Abstract: | In 2014, Russia imposed an import embargo on selected goods, effectively reducing trade flows and decreasing import competition across several industries. In this paper, I analyze the effect of this decrease in product market competition on the gender pay gap in Russia. This research complements the body of evidence which implies that increases in product market competition lead to lower gender pay gaps. The empirical analysis relates 2011-2019 industry-specific gender wage gaps estimated from the Russian Longitudinal Monitoring Survey to the industry-level evolution of import penetration. The results show that a 10 percentage point reduction in import competition leads to an increase of about 4 percentage point in gender pay gap. This increase is smaller in magnitude than the effect found in the US but larger than that observed in some Eastern European countries. This phenomenon partly corresponds to an exacerbation of the gender employment gap driven primarily by high-skilled women leaving industries where import shares, and consequently competition, declined. |
| Keywords: | Gender Pay Gap, Product Market Competition, Russia, Sanctions |
| JEL: | J71 F14 F51 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:cer:papers:wp788 |
| By: | Giuseppe Berlingieri; Filippo Boeri; Danial Lashkari; Jonathan Vogel |
| Abstract: | We study capital-skill complementarity in a multi-sector framework featuring firm-specific, multi-factor production functions and allowing for firm-specific factor-price wedges. We characterize the elasticity of the skill premium to the price of capital equipment in terms of firm-level elasticities of substitution across factors, elasticities of substitution across firms and sectors, and factor intensities. Using French data, we provide credible identification of these firm-level elasticities. Combining these elements we offer the first identification of aggregate capital-skill complementarity that allows for arbitrary trends in the unobservable skill-bias of productivity at the firm, industry, and aggregate levels. We find an economically and statistically significant degree of aggregate capital-skill complementarity, but this force alone is insufficient to generate the full increase in the relative demand for high-skilled workers observed in the data. There is a substantial role for skill-augmenting technical change not embodied in capital equipment. |
| JEL: | E10 E23 E25 J30 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33000 |