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on Labor Markets - Supply, Demand, and Wages |
| By: | Ozge Demirci; Jonas Hannane; Xinrong Zhu |
| Abstract: | This paper studies the impact of Generative AI technologies on the demand for online freelancers using a large dataset from a leading global freelancing platform. We identify the types of jobs that are more affected by Generative AI and quantify the magnitude of the heterogeneous impact. Our findings indicate a 21% decrease in the number of job posts for automation-prone jobs related to writing and coding, compared to jobs requiring manual-intensive skills, within eight months after the introduction of ChatGPT. We show that the reduction in the number of job posts increases competition among freelancers while the remaining automation-prone jobs are of greater complexity and offer higher pay. We also find that the introduction of Image-generating AI technologies led to a 17% decrease in the number of job posts related to image creation. We use Google Trends to show that the more pronounced decline in the demand for freelancers within automation-prone jobs correlates with their higher public awareness of ChatGPT’s substitutability. |
| Keywords: | generative AI, large language models, ChatGPT, digital freelancing platforms |
| JEL: | O33 E24 J21 J24 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11276 |
| By: | Andrew C. Johnston |
| Abstract: | I examine teacher preferences using a discrete-choice experiment, which I link to administrative data on teacher effectiveness. I estimate willingness-to-pay for a rich set of compensation elements and working conditions. Highly effective teachers usually have the same preferences as their peers, but they have stronger preferences for performance pay. I use the preference estimates to investigate the optimal compensation structure for three key objectives: maximizing teacher utility, maximizing teacher retention, and maximizing student achievement. Under each objective, schools underutilize salary and performance pay, while overutilizing retirement benefits. Restructuring compensation can significantly improve both teacher welfare and student achievement. |
| JEL: | I20 J32 J45 M50 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33088 |
| By: | Michal Burzynski; Giovanni Peri |
| Abstract: | We analyze the implications of non-EU immigration for wage distribution and inequality among European workers, by focusing on their migration across local labor markets and within- and across-occupational mobility. To quantify the role of each channel, we build a multi-region, multi-occupation and multi-sector model of labor markets that replicates the regularities of labor mobility across spatial and occupational cells in Europe observed in the data. We find that non-EU immigration increases wages of the majority of European workers, while generating significant sorting across occupations (job upgrading) and inducing negative self-selection of natives into inactivity. The overall level of income inequality rises (especially the between-occupation component), fueled by natives’ mobility across jobs. The sorting of native workers across regions induced by immigration is of lesser importance for welfare and inequality, but shapes the spatial distribution of overall effects. |
| Keywords: | Immigration; Welfare; Sorting; Self-selection |
| JEL: | C68 J24 J31 J62 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:irs:cepswp:2024-09 |
| By: | Lorenzo Incoronato; Salvatore Lattanzio |
| Abstract: | This paper studies a place-based industrial policy (PBIP) aiming to establish industrial clusters in Italy in the 1960s-70s. Combining historical archives spanning one century with administrative data and leveraging exogenous variation in government intervention, we investigate both the immediate effects of PBIP and its long-term implications for local development. We document agglomeration of workers and firms in the targeted areas persisting well after the end of the policy. By promoting high-technology manufacturing, PBIP favored demand for business services and the emergence of a skilled local workforce. Over time, this produced a spillover from manufacturing – the only sector targeted by the program – to services, especially in knowledge-intensive jobs. Accordingly, we estimate higher local wages, human capital, and house prices in the long run. We provide suggestive evidence that these persistent effects may depend on the initial conditions of targeted locations. |
| Keywords: | place-based industrial policy, employment, wages, agglomeration |
| JEL: | J24 N94 O14 O25 R58 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11397 |
| By: | Arindrajit Dube; Attila Lindner (UCL) |
| Abstract: | This chapter surveys the literature on the impact of minimum wages on low-wage labor markets. We describe and critically review the empirical methods in the new minimum wage literature, particularly those leveraging quasi-experimental variation. We provide a quantitative overview of the most recent evidence on the employment and wage effects of the policy, while also exploring emerging research on its impact on other margins, including amenities, other inputs (such as capital and high-skilled workers), firm entry and exit, output prices and demand, profits, and productivity. This approach allows us to present a comprehensive picture of how minimum wage policies affect firms, workers, and labor markets. We also review the evidence on the policy’s impact on wage inequality and income distribution. Finally, we discuss how these effects can vary depending on the economic context and the level of a country’s development. |
| Keywords: | minimum wages, labor demand, employment and wage effects, margins of adjustment, inequality |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2524 |
| By: | Somers, Melline (RS: GSBE other - not theme-related research, ROA / Health, skills and inequality); Stolp, Tom (RS: GSBE other - not theme-related research, ROA / Education and transition to work); Burato, Francesca; van Merode, Frits (Faculteit FHML Centraal, RS: CAPHRI - R2 - Creating Value-Based Health Care); Vooren, Melvin |
| Abstract: | The healthcare and education sectors suffer from shortages of nurses and teachers. Extending their working hours has often been proposed as a solution to this. In this study, we conduct a discrete choice experiment (DCE) in the Netherlands to elicit nurses’ and teachers’ preferences for different jobs and working conditions. We present both nurses and teachers with nine hypothetical choice sets, each consisting of two jobs that differ in seven observable job attributes. From the DCE, we infer workers’ willingness to pay for these different job characteristics. Moreover, we calculate how many additional hours workers would be willing to work if a specific workplace condition were met. We find that both nurses and teachers most negatively value high work pressure. Spending a lot of time on patient-related tasks is highly valued by nurses, followed by having more control over working hours. Next to work pressure, teachers place significant importance on receiving social support from both colleagues and managers. Nurses and teachers who work part-time require higher incentives to work additional hours compared to full-time workers. |
| JEL: | J45 J81 |
| Date: | 2024–10–30 |
| URL: | https://d.repec.org/n?u=RePEc:unm:umaror:2024005e |
| By: | Böckerman, Petri; Juuti, Toni; Kosonen, Tuomas; Keränen, Henri |
| Abstract: | We examine a subminimum wage policy in the Finnish retail trade sector during 1993–1998 that allowed firms to pay subminimum wages to newly hired workers under the age of 25. This quasi-experiment enables us to compare wages for new hires in retail trade with those in similar industries. Despite the ongoing recession, the policy was adopted by firms sparingly, with most eligible workers being hired at the standard minimum wage. We propose that wage norm at the standard minimum wage creating indirect costs for firms paying subminimum wage would be the mechanism why the take-up of subminimum wage by firms remained low. We provide empirical evidence supporting this mechanism, most notably the excess mass at the standard minimum wage in the wage distribution of eligible workers. Many firms that paid the subminimum wage also reverted back to paying the standard minimum wages for subsequent hires. |
| Keywords: | Minimum wages, subminimum wage, wage determination, fairness, employment, firms, Labour markets and education, J31, J38, D22, fi=Työmarkkinat|sv=Arbetsmarknad|en=Labour markets|, |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:fer:wpaper:169 |
| By: | Minniti, Antonio; Prettner, Klaus; Venturini, Francesco |
| Abstract: | We study how the development of Artificial Intelligence (AI) influences the distribution of income between capital and labor and how this, in turn, exacerbates geographic income inequality. To investigate this issue, we first build a theoretical framework and then analyze data from European regions dating back to 2000. We find that for every doubling of regional AI innovation, there is a 0.7% to 1.6% decline in the labor share, which may have decreased by between 0.20 and 0.46 percentage points from a mean of 52% due solely to AI. This new technology is particularly detrimental to high-skill and medium-skill labor. The impact on income distribution is driven by worsening wage and employment conditions for high-skill labor, and by wage compression for medium- and low-skill labor. The effect of AI is not driven by other factors affecting regional development in Europe, nor by the concentration process in the AI market. |
| Keywords: | Artificial Intelligence; patenting; labor share; European regions |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:wiw:wus005:68239150 |
| By: | Hunt, Jennifer (Rutgers University); Cockburn, Iain (Boston University); Bessen, James (Boston University) |
| Abstract: | Using our own data on Artificial Intelligence publications merged with Burning Glass vacancy data for 2007-2019, we investigate whether online vacancies for jobs requiring AI skills grow more slowly in U.S. locations farther from pre-2007 AI innovation hotspots. We find that a commuting zone which is an additional 200km (125 miles) from the closest AI hotspot has 17% lower growth in AI jobs' share of vacancies. This is driven by distance from AI papers rather than AI patents. Distance reduces growth in AI research jobs as well as in jobs adapting AI to new industries, as evidenced by strong effects for computer and mathematical researchers, developers of software applications, and the finance and insurance industry. 20% of the effect is explained by the presence of state borders between some commuting zones and their closest hotspot. This could reflect state borders impeding migration and thus flows of tacit knowledge. Distance does not capture difficulty of in-person or remote collaboration nor knowledge and personnel flows within multi-establishment firms hiring in computer occupations. |
| Keywords: | Artificial Intelligence, technology adoption and diffusion |
| JEL: | O33 R12 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17325 |
| By: | Susan Athey; Juan Camilo Castillo; Bharat Chandar |
| Abstract: | Online marketplaces have adopted new quality control mechanisms that can accommodate a flexible pool of providers. In the context of ride-hailing, we measure the effectiveness of these mechanisms, which include ratings, incentives, and behavioral nudges. Using telemetry data as an objective measure of quality, we find that drivers not only respond to user preferences but also improve their behavior after receiving warnings about their low ratings. Furthermore, we use data from a randomized experiment to show that informing drivers about their past behavior improves quality, especially for low-performing drivers. Lastly, we find that UberX drivers exhibit behavior comparable to that of UberTaxi drivers, suggesting that Uber’s new quality control mechanisms successfully maintain a high level of service quality. |
| JEL: | J28 J48 L50 L91 R41 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33087 |
| By: | Patrick M. Kline |
| Abstract: | This paper reviews the literature on firm wage differences and the fixed effects methods typically used to measure these differences. High wage firms tend to be more productive, larger, more sought after by workers, and to employ more credentialed and higher wage workers. The latest evidence suggests high wage firms also tend to offer better amenities and are prone to outsourcing and mass layoffs. Reviewing the requirements of the “AKM model” of Abowd, Kramarz, and Margolis (1999), I provide a graph theoretic interpretation of the restrictions this model places on the wage changes of workers who switch employers and examine the extent to which they are satisfied in a benchmark dataset. Assumptions are provided that give these wage changes a causal interpretation and I discuss some difficulties that arise in aggregating them into a global ranking of firm wage levels. In reviewing the econometrics of variance decompositions, I argue that attention ought to focus on effect sizes rather than variance shares, which can be difficult to compare across datasets with different noise levels. Cross-fitting and clustering methods for addressing limited mobility bias are reviewed. A series of bounding and imputation exercises suggest the network pruning typically used in conjunction with cross-fitting methods has little effect on estimands of interest. A review of the latest international evidence finds that the bias corrected standard deviation of firm effects tends to be substantially elevated in less developed countries. Variance estimation methods for second step regressions of firm effects on covariates are reviewed and illustrated with an empirical application to the firm size wage premium. Finally, I discuss connections between the AKM model and the celebrated sequential auction framework of Postel-Vinay and Robin (2002a), concluding with some areas for future work at this intersection. |
| JEL: | J3 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33084 |
| By: | Massenz, Gabriella (Research Institute of Industrial Economics (IFN)) |
| Abstract: | We study responsiveness of owner-managed companies to a corporate income tax kink using Dutch tax records linking firms to their owners. The corporate taxable income elasticity (CETI) is 0.08, but tax sensitivity is over three times higher for firms using specific investment deductions. These are generous, allow for large depreciation and include assets that can reflect owner-managers’ consumption. The CETI rises with deductions’ use and is higher for large firms in industries with easy access to them. We document persistence at the kink, which is driven by large firms using deductions and whose owner-managers repeatedly target personal income tax kinks. |
| Keywords: | Taxable income elasticity; Owner-managed companies; Tax deductions; Bunching |
| JEL: | H24 H25 H26 H30 |
| Date: | 2024–10–07 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:iuiwop:1503 |
| By: | Sergii Meleshchuk; Yannick Timmer |
| Abstract: | In this paper, we show that a reduction in capital goods prices induced by trade policies can stimulate both investment and labor. We exploit a quasi-natural experiment in the form of a trade reform in Colombia to study how firms with differential exposure to reductions in capital goods tariffs react in terms of their investment and labor decision. Firms that see a larger decline in the input tariff for capital goods increase investment and labor for production, as well as their labor share. Reductions in input tariffs are passed through to input prices for all goods. However, only lower prices for capital, not for other goods, translate into more investment and employment of production workers. |
| Keywords: | investment, tariffs, capital goods, price of capital, employment, trade reform, Colombia |
| JEL: | D22 D25 E22 E24 F13 F14 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11285 |
| By: | Zhou, Alex (Department of Economics, University of Warwick,); Mahadeshwar, Ruchi (Department of Economics, Brown University,) |
| Abstract: | Despite its recognized inefficiency, the persistence of income hiding between spouses remains largely unaddressed in the literature. Our study suggests that one cause of persistency is that this behavior may provide strategic benefits, particularly by affecting labor supply decisions and overall household income. Using a field experiment involving low-income workers in Southeast Asia, we estimate the effects of randomly disclosing spousal income on productivity in a standardized work task. Our findings indicate that income disclosure significantly affects labor productivity compared to a nondisclosure scenario, in which spouses can conceal any income generated. The effects exhibit notable gender differences: when income is disclosed to their spouses, women decrease productivity, while men increase productivity. We introduce a two-stage game model and further empirical tests to demonstrate that these gender differences arise from disparities in bargaining power, with men holding significantly more bargaining power than women. Overall, this study sheds light on the unintended consequences of financial inclusion or pay transparency policies on both productivity and household inequality. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1525 |
| By: | Kenza Elass; Cecilia García-Peñalosa; Christian Schluter; Cecilia Garcia-Peñalosa |
| Abstract: | We examine the economic geography of gender wage gaps to understand the role that location plays in gender earning differences. Using panelised administrative data for the universe of French workers, our findings indicate that women benefit relatively more from density than men, with an urban wage premium (return to urban density) 48% higher than for men. We identify a number of factors that explain this gap, with a large share being explained by the structure of the local labour market, notably, the extent of occupational segregation. Another important factor is commuting patterns, while childcare availability plays only a moderate role. |
| Keywords: | gender wage gap, agglomeration economies, urban wage premium |
| JEL: | J31 J16 R10 R23 R12 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11374 |
| By: | Heaney, Tiarnán |
| Abstract: | A large literature argues that resource constraints inhibit human capital accumulation. We test this hypothesis using the introduction of the Old Age Pension in Ireland in 1908, evaluating its spillover on school enrolments within multigenerational households. Exploiting the OAP's age-based and means-test criteria, we identify the causal effect of the cash transfer on enrolments for children aged 14 to 16 using data from the 1901 and 1911 Censuses of Ireland. The OAP increased the school enrolments of the poorest children by 8 per cent, while no effect is detected for wealthier households. This suggests that when poverty constrains schooling, unconditional cash transfers amplify a household's demand for education by reducing the opportunity costs of schooling. |
| Keywords: | schooling, poverty, old age pension, cash transfer, human capital, economic history of Ireland |
| JEL: | D31 H55 I25 J18 J24 N33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:qucehw:305271 |
| By: | Pelin Akyol; Kala Krishna; Sergey Lychagin |
| Abstract: | Using data from the Turkish University Entrance Exam, we investigate the extent of the gender gap in college placement, its underlying causes, and potential policy interventions. We estimate preferences using a novel approach which improves our ability to capture substitution patterns and find clear evidence that placement differences are primarily driven by preference differences across gender. We compare stipend subsidies to score bonuses that achieve gender parity. Score subsidies improve the welfare of women almost entirely at the cost of men with similar scores and favor high-income women. Stipend subsidies improve the welfare of women, but at little cost to men and favor low-income women. Our work is the first to show that how gender neutrality is achieved matters to society. |
| JEL: | C6 I20 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33074 |
| By: | Jackson, Bella |
| Abstract: | The Age of Mass Migration saw unprecedented flows of Italian migrants to the US and Argentina, mostly directed to NYC and Buenos Aires. Droller, Fizsbein and Pérez claim that Italians in Argentina were more skilled than those in America. If so, why did higher-skilled Italians move to Argentina over America when real wages were higher in America than Argentina? I assemble datasets using Argentine and American censuses and wage data to compare literacy rates and occupational compositions of Italian immigrants between these countries and cities. I create a regression model to contrast the returns to skills between Italians in Argentina and America and I determine skill premia for both Italian cohorts using income data. I find that Italian immigrants in Argentina were more skilled than Italian immigrants in America, due to higher literacy rates and a higher-skilled occupational composition. I argue that the skill scarcity in Argentina, and higher returns to skills and skill premia than America, explains the greater appeal of Argentina for skilled Italian migrants. I stress the importance of considering returns to skills and skill premia when studying migratory flows between destination countries. |
| Keywords: | gender pay gap; gender equality; economic growth; human development; South Korean growth; marital status; trade unions |
| JEL: | J24 J61 |
| Date: | 2024–10–21 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125829 |
| By: | Olympia Bover (BANCO DE ESPAÑA); Laura Hospido (BANCO DE ESPAÑA, CEMFI AND IZA); Ana Lamo (EUROPEAN CENTRAL BANK) |
| Abstract: | Using anonymised personnel records from the Banco de España, we examine gender differences in career progression. This institution features a complex professional development system, in which competitive calls, direct appointments and vertical promotions coexist. We document that the presence of women has increased markedly since the late 1990s, although not always in a monotonic manner. Comparing male and female potential candidates for the same process, we find no significant gender gaps in the probability of promotion in competitive calls, nor in direct appointments or in vertical promotions. Among managers, however, our findings suggest differences between different types of promotion processes. In promotions to/between department director and division head positions, we do find a significantly lower probability of promotion for women relative to men through competitive calls. We also find that women are less likely to apply for managerial positions in competitive calls than men. Finally, in the business areas where most economists work, we find that women are less likely than men to be promoted to/between department director and division head positions in competitive calls, but have a higher probability of achieving vertical promotions to positions immediately below these levels in the hierarchy, such as unit heads. For this group of business areas, gender differences in the probability of application are not significant. |
| Keywords: | gender gaps, working histories, central banking |
| JEL: | J16 J31 J41 J63 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2443 |
| By: | Guerrazzi, Marco |
| Abstract: | In this paper, I explore the relationship between wage bargaining and capital accumulation by developing a differential game in which a monopolistic union sets the wage of its members by taking as given the optimal employment strategy of a representative firm and the way in which capital is evaluated over time. Under the assumption that investment amounts to a constant share of produced output, I show that a meaningful open-loop Stackelberg equilibrium requires the union to be more patient than the firm. Moreover, relying on some numerical simulations, I show that although adjustments towards the steady-state equilibrium occur through damped oscillations, after an initial period of decline, the model predicts a stable union wage premium. |
| Keywords: | Monopoly union model, Capital accumulation, Binding wage contracts, Differential games, Open-loop Stackelberg equilibrium |
| JEL: | J31 J51 J52 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1515 |
| By: | Xun, Yang (University of Warwick) |
| Abstract: | Talent is a key input in the delivery of public services, yet less is known about whataffects the supply of talent for the public sector. This paper studies the role of political corruption in shifting talent allocation across public and private sector careers. I exploit a randomized anti-corruption audit program in Brazil together with comprehensive micro-data on educational and labor market outcomes of college students. Using a generalized difference-in-difference research design, I find that high-ability students in audited municipalities are less likely to choose majors tailored toward public sector careers, such as business administration and law. Moreover, tracking students to the labor market demonstrates that audits also lead to a lower share of high-ability students working as civil servants. Finally, I provide suggestive evidence that the effects of audits on talent allocation can be driven by the perception of lower rent-seeking returns and higher reputation costs. Taken together, these findings highlight an understudied negative consequence of corruption on the economy : the distortion of talent allocation toward rent-seeking in the public sector. |
| Keywords: | Corruption ; Audits ; Talent Allocation ; Major Choice ; Public Sector JEL Codes: D73 ; H83 ; I25 ; J24 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1526 |
| By: | De Acutis, Costanza (Central European Forum for Migration and Population Research, Warsaw); Weber, Andrea (Central European University); Wurm, Elisabeth (Central European University) |
| Abstract: | We use a meta-analysis to summarize the recent literature evaluating effects of the introduction of gender quotas on company boards. We collect data from 51 studies on policies implemented in 11 countries from which we extract 496 estimates. The literature considers the effects of quota policies on a wide range of outcome variables which we group in four categories. The findings of the meta-analysis contribute to the discussion of boardroom quota policies by mitigating some concerns of negative impacts and pointing out areas where more policy action is needed. |
| Keywords: | corporate governance, diversity, gender quota, meta-analysis |
| JEL: | C8 G3 J7 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17333 |
| By: | Diogo G. C. Britto; Gianmarco Daniele; Marco Le Moglie; Paolo Pinotti; Breno Sampaio |
| Abstract: | We study the prevalence and effects of individuals with past criminal charges among candidates and elected politicians in Brazil. Individuals with past criminal charges are twice as likely to both run for office and be elected compared to other individuals. This pattern persists across political parties and government levels, even when controlling for a broad set of observable char-acteristics. Randomized anti-corruption audits reduce the share of mayors with criminal records, but only when conducted in election years. Using a regression discontinuity design focusing on close elections, we demonstrate that the election of mayors with criminal backgrounds leads to higher rates of underweight births and infant mortality. Additionally, there is an increase in political patronage, particularly in the health sector, which is consistent with the negative impacts on local public health outcomes. |
| Keywords: | politicians, crime, audits, policies, patronage |
| JEL: | K42 J45 P16 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11382 |