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on Labor Markets - Supply, Demand, and Wages |
| By: | Cäcilia Lipowski |
| Abstract: | Firms in developed countries face increasing shortages of young workers. This paper studies the importance of young workers, particularly vocational trainees, for firm technology investments. Leveraging exogenous variation in trainee supply caused by an education reform in Germany in 2001, I show that a reduction in trainee supply decreases firm technology investments. This suggests complementarity between young workers and new technologies. Consistent with firms’ lower opportunity costs and higher returns to training young workers than incumbents, the effect is driven by firms exposed to new tech skills. These findings dampen hopes of counteracting labor shortages by substituting labor with capital. |
| Keywords: | endogenous technological change, labor shortages, firm investments, capital adjustment costs, vintage-specific skills |
| JEL: | D22 D24 J21 J24 O33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11471 |
| By: | Falck, Oliver (Ifo Institute for Economic Research); Guo, Yuchen (ifo Institute, University of Munich); Langer, Christina (Stanford University); Lindlacher, Valentin (Dresden University of Technology); Wiederhold, Simon (IWH Halle) |
| Abstract: | Job training is widely regarded as crucial for protecting workers from automation, yet there is a lack of empirical evidence to support this belief. Using internationally harmonized data from over 90, 000 workers across 37 industrialized countries, we construct an individual-level measure of automation risk based on tasks performed at work. Our analysis reveals substantial within-occupation variation in automation risk, overlooked by existing occupation-level measures. To assess whether job training mitigates automation risk, we exploit within-occupation and within-industry variation. Additionally, we employ entropy balancing to re-weight workers without job training based on a rich set of background characteristics, including tested numeracy skills as a proxy for unobserved ability. We find that job training reduces workers' automation risk by 4.7 percentage points, equivalent to 10 percent of the average automation risk. The training-induced reduction in automation risk accounts for one-fifth of the wage returns to job training. Job training is effective in reducing automation risk and increasing wages across nearly all countries, underscoring the external validity of our findings. Women tend to benefit more from training than men, with the advantage becoming particularly pronounced at older ages. |
| Keywords: | job training, human capital, automation, technological change, entropy balancing |
| JEL: | J24 J31 J61 O33 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17503 |
| By: | Barış Kaymak |
| Abstract: | This paper quantifies the signaling role of education and measures the associated efficiency losses from asymmetric information. To that end, I model educational attainment and occupational choices in an asymmetric information environment with employer learning and socially productive education. The model highlights how occupational sorting and the pace of employer learning jointly determine the strength of the signaling motive in equilibrium. I estimate the signaling role of education versus human capital by relating differences in employer learning across occupations, which generates variation in signaling incentives, to the distribution of ability and educational attainment by occupation. The estimates suggest that the role of job market signaling relative to the human capital model is 23 percent. On the margin, a year of additional schooling raises productivity by 6.4 percent and the return to signaling is 2.4 percent. In a counterfactual analysis, eliminating asymmetric information reallocates labor from education to workforce participation and improves occupational sorting. Aggregate efficiency gains are equivalent to 7.6 percent of lifetime earnings. |
| Keywords: | signaling; education; asymmetric information; productivity |
| JEL: | D82 J24 |
| Date: | 2025–01–09 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedcwq:99410 |
| By: | Justin Heck; Blair Corcoran de Castillo; Peter Q. Blair; Papia Debroy |
| Abstract: | In the past two years, 25 states have enacted executive orders and legislation to reduce unnecessary degree requirements for public sector jobs, signaling a shift toward skill-based hiring. This paper examines the impact of these policy commitments on public perceptions, media coverage, and job posting practices in the time following their adoption. Our analysis reveals significant increases in public awareness of skill-based hiring concepts, such as the 'paper ceiling' (i.e., bachelor’s degree analog of the glass ceiling), and a notable decline in bachelor’s degree requirements in state government job postings. We estimate that degree requirements dropped by 2.5 percentage points for each additional year of policy exposure in states with commitments. These findings suggest that state policy commitments have expanded access to government jobs for workers skilled through alternative routes (STARs) other than the bachelor’s degree in keeping with the intended goals of the policies to broaden the talent pool for public sector hiring. |
| JEL: | J18 J23 J24 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33220 |
| By: | Demir, Gökay (IZA) |
| Abstract: | This paper analyzes the horizontal spillover effects of Germany's first sectoral minimum wage. Using a difference-in-differences estimation, I examine the impact of the public announcement and introduction of the minimum wage on sub-minimum wage workers in related jobs outside the minimum wage sector, defined using employment flows. I find an increase in wages and job-to-job transitions for sub-minimum wage workers in related jobs. The spillover effects are driven by workers who reallocate to better-paying establishments, have low labor market experience, and are more closely connected to the minimum wage sector by having former coworkers in that sector. |
| Keywords: | spillover, outside option, labor market frictions, minimum wages |
| JEL: | J31 J38 J42 J62 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17510 |
| By: | Samuel Häfner; Niklas Haeusle; Winfried Koeniger; Alexander Braun |
| Abstract: | We develop a model in which large risk-neutral firms and individual risk-averse consumers compete to employ heterogeneous workers by posting compensation menus. Production takes time, and we analyze how screening motives interact with the desire to smooth consumption. There is a unique symmetric separating equilibrium that is also efficient. In equilibrium, the extent to which the compensation scheme delays payment until the production quality becomes known depends on whether, and to which extent, the consumers are financially constrained. We discuss how our model relates to the design of compensation schemes in current online peer-to-peer markets. |
| Keywords: | adverse selection, self selection, peer-to-peer markets, labor markets, capital market imperfections |
| JEL: | D15 D82 D86 E24 J33 M52 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11488 |
| By: | Francine D. Blau |
| Abstract: | This article examines the trends in women’s economic outcomes in the United States focusing primarily on labor force participation, occupational attainment, and the gender wage gap. The author first highlights considerable progress on all dimensions prior to the 1990s followed by a slowing or stalling of gains thereafter, with a plateauing of female labor force participation trends and a slowing of women’s occupational and wage convergence with men. She considers the likelihood of a resumption of progress in narrowing gender gaps in these areas, concluding it is unlikely without policy intervention. She then considers some new policy initiatives addressing work-family issues and labor market discrimination that may hold potential for increasing female labor force participation and narrowing gender inequities in the labor market. |
| JEL: | J16 J18 J21 J24 J31 J48 J71 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33266 |
| By: | Giulia Valenti (Ca’ Foscari University of Venice and Fondazione Eni Enrico Mattei); Francesco Vona (University of Milan and Fondazione Eni Enrico Mattei) |
| Abstract: | This paper examines the impact of temperature shocks, measured by cold and heat waves, on labour market outcomes across 14 European countries. Using retrospective individual-level data from the Survey on Health, Ageing, and Retirement in Europe (SHARE) and daily climate data from the E-OBS dataset, we analyze the effect on wages and occupational transition. By leveraging plausibly exogenous weather shocks, we find that heat waves significantly reduce individual income, with losses accumulating over time. Moreover, our analysis documents that older individuals, those with severe health conditions, and workers in heat-exposed occupations experience particularly large income reductions. Losses are also more pronounced in Mediterranean and Eastern European countries, as well as in regions with less regulated wage-setting mechanisms. Additionally, our findings suggest that heat waves increase the likelihood of changing jobs and in particular to transition from heat-exposed to non-heat-exposed occupations. These results underscore the need for targeted policy interventions to mitigate economic losses and protect vulnerable workers in the face of increasing climate variability. |
| Keywords: | Temperature, labour market, wages, occupational transition |
| JEL: | Q54 J24 J30 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:fem:femwpa:2024.31 |
| By: | Brüll, Eduard (ZEW); Rostam-Afschar, Davud (University of Mannheim); Schlenker, Oliver (University of Konstanz) |
| Abstract: | We study how the threat of entry affects service quantity and quality of general practitioners (GPs). We leverage Germany's needs-based primary care planning system, in which the likelihood of new GPs reduces by 20 percentage points when primary care coverage exceeds a cut-off. We compile novel data covering all German primary care regions and up to 30, 000 GP-level observations from 2014 to 2019. Reduced threat of entry lowers patient satisfaction for incumbent GPs without nearby competitors but not in areas with competitors. We find no effects on working hours or quality measures at the regional level including hospitalizations and mortality. |
| Keywords: | threat of entry, healthcare provision, general practitioners, entry regulation, regression discontinuity design |
| JEL: | I11 I18 J44 J22 L10 L22 R23 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17504 |
| By: | Jessen, Robin (RWI); König, Johannes (DIW Berlin) |
| Abstract: | We decompose earnings risk into contributions from hours and wage shocks. To distinguish between hours shocks, modeled as innovations to the marginal disutility of work, and labor supply reactions to wage shocks we formulate a life-cycle model of consumption and labor supply. For estimation we use data on married American men from the PSID. Permanent wage shocks explain 31% of total risk, permanent hours shocks 21%. Progressive taxation attenuates cross-sectional earnings risk, but its life-cycle insurance impact is much smaller. At the mean, a one standard deviation hours shock raises life-time income by 11%, a wage shock by 13%. |
| Keywords: | consumption insurance, labor supply, earnings risk, structural estimation, progressive taxation |
| JEL: | D31 J22 J31 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17498 |
| By: | Abel, Martin (Bowdoin College); Robbett, Andrea (Middlebury College); Stone, Daniel F. (Bowdoin College) |
| Abstract: | This study experimentally investigates the role of politics in hiring decisions. Participants acted as employers, determining the highest wage to offer candidates based only on their demographic characteristics, education, and partisanship. We find that both Democratic and Republican participants significantly favor co-partisans, with an out-partisan wage penalty of 7.5%. Discrimination is consistent across tasks that focus respectively on competence, shirking, feedback responsiveness, and voluntary effort, and appears largely driven by biased beliefs about partisan productivity, while affective polarization is also predictive of the out-partisan wage penalty. Discrimination does not increase in a treatment where workers benefit financially from being hired. |
| Keywords: | discrimination, affective polarization, inaccurate beliefs |
| JEL: | J70 D90 C91 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17540 |
| By: | Schaefer, Daniel (Johannes Kepler University Linz); Singleton, Carl (University of Stirling); Theodoropoulos, Nikolaos (University of Cyprus) |
| Abstract: | This study examines returns to tenure using Mincer wage regressions and longitudinal employer-employee payroll data from Great Britain. We find a pervasive downward bias in estimates of returns to tenure that rely solely on match fixed effects to control for unobserved factors influencing wages and tenure. This bias stems from the co-movement of average wages and tenure within firms, as theorised and empirically shown by Snell et al. (2018). By addressing this bias with firm-year fixed effects, we find that tenure-wage profiles increase by up to 20% in Britain's largest private-sector employers. Further analysis reveals that the bias primarily originates from non-base earnings (e.g., overtime). These findings underscore the need for caution when interpreting tenure returns from wage regressions that omit firm-year fixed effects, particularly in samples where non-base earnings are present; even if base earnings are sticky, firms may adjust other earnings components in response to shocks that influence employment levels. |
| Keywords: | equal treatment wages, employer-employee data, mincer wage equation, UK Labour Market |
| JEL: | C23 J31 J63 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17489 |
| By: | Edoardo Di Porto; Marco Pagano; Vincenzo Pezone; Raffaele Saggio; Fabiano Schivardi |
| Abstract: | We investigate compensation policies in family and non-family firms using a novel employer-employee matched dataset comprising nearly the universe of Italian incorporated firms and ownership information. Family firms pay significantly lower wages and offer slower and less rewarding careers. Differences in worker sorting account for half of the wage gap while productivity differences and compensating differentials explain little of the residual gap. The wage distribution in family firms is more compressed, with infrequent promotions. We rationalize this evidence with a model where family owners seek to maintain control, creating a “glass ceiling” that limits their employees’ career progression. |
| JEL: | G30 G38 J01 J30 J31 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33219 |
| By: | Marc-Andreas Muendler; James E. Rauch; Sergio Mikio Koyama |
| Abstract: | New firms do not yet have employees who can aid recruiting by referrals, but entrepreneurs can recruit workers they know to their startups—in effect making their own referrals. We consider new firms in Brazil’s formal sector founded between 2002 and 2014, for which at least one founding owner can be traced to previous formal employment. We find that 35.1 percent of new firms with at least five employees hire one or more coworkers from a founding owner’s last employer in their first year of operation, and that 9.2 percent of first-year hires at new firms were coworkers at a founding owner’s last employer. The former coworkers most likely to join a founding owner’s new firm are those who, at their last employer, worked in the same plant as a founding owner, had long overlap with a founding owner, were classified in the same industry or occupation as a founding owner, and were hired at roughly the same time as a founding owner. Controlling for observable human capital and new firm fixed effects, former coworkers earn eight percent higher initial wages at new firms and are six percentage points less likely to separate before a new firm’s second year of operation. We find that the coworker wage premium diminishes with tenure by 0.5 percentage points per year and the coworker separation premium diminishes with tenure by 2.0 percentage points per year. |
| JEL: | J24 J63 L26 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33230 |
| By: | Fabian Kosse; Tim Leffler; Arna Woemmel |
| Abstract: | We investigate social disparities in digital skills, focusing on both actual proficiency levels and confidence in these skills. Drawing on a representative sample from Germany, we first demonstrate that both dimensions strongly predict labor market success. We then use this sample to identify gender and socioeconomic disparities in levels and confidence. Finally, using a long-run RCT panel framework with young adults, we confirm these disparities and provide causal evidence on the effects of enhancing the social environment in childhood. Assigning elementary school-aged children to a mentoring program persistently reduces socioeconomic gaps in confidence related to digital skills, but it does not affect the level of digital skills. |
| Keywords: | digital skills, technological transformation, inequality, early childhood mentoring |
| JEL: | C93 D63 I24 J24 O33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11570 |
| By: | Brescianini, Sonia (Istituto Superiore di Sanità); Cappellari, Lorenzo (LISER); Checchi, Daniele (University of Milan) |
| Abstract: | We use administrative data on educational attainments and life-time earnings to study their correlations among Italian twins. Using the ACE decomposition, we find that heritability in education accounts to almost half of the variance, especially for younger birth cohorts. With respect to labour market outcomes, we find that only for the oldest cohorts there is a greater share of inequality that can be attributed to idiosyncratic factors compared to education, and symmetrically a lower share due to genetics, while the impact of shared environment remains stable among the youngest cohorts. We suggest that increased employment flexibility may be responsible for the decline in the environmental component. Using a larger sample of pseudo-twins (individuals sharing birth date, birth place and family name) we confirm previous results, providing evidence that heritability also drives labour market attachment and prosocial behaviour. |
| Keywords: | heritability, inequality, labour market outcomes, Italy |
| JEL: | D31 E21 I24 J31 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17476 |
| By: | Amanda Dahlstrand; Dávid László; Helena Schweiger; Oriana Bandiera; Andrea Prat; Raffaella Sadun |
| Abstract: | Firms are key to economic development, and CEOs are key to firm productivity. Are firms in countries at varying stages of development led by the right CEOs, and if not, why? We develop a parsimonious measure of CEO time use that allows us to differentiate CEOs into “leaders” and “managers” in a survey of 4, 800 manufacturing firms across 42 countries, with income per capita ranging from USD 4, 000 to 45, 000. We find that poorer countries have fewer leaders and relate this to training opportunities. Even when suitable leaders are available, they often do not lead the firms that would benefit the most, resulting in mismatches that can cause up to a 20% loss in productivity for the mismatched firms. The findings imply that policies that address the causes of mismatch could significantly enhance growth without additional resources. |
| JEL: | J24 M12 O47 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33324 |
| By: | Dupuy, Arnaud (University of Luxembourg); Raux, Morgan (University of Luxembourg); Signorelli, Sara (CREST) |
| Abstract: | The recent digital revolution has significantly broadened the scope of IT-related tasks in most occupations in the labor market. In this paper, we document these changes, we propose a novel conceptual framework for thinking about the effect of technological change that incorporates the changing task distance between occupations, and we investigate its impact on worker mobility using a gravity equation approach. Our results reveal that the evolution of skill distance between jobs significantly affected mobility patterns, disproportionately favoring workers with preexisting knowledge of digital tools. Finally, we micro-found our gravity equation through a matching model to evaluate mobility in counterfactual scenarios without technological change. |
| Keywords: | occupation mobility, technological change, search and matching |
| JEL: | J23 J24 J62 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17535 |
| By: | Voraprapa Nakavachara; Tanapong Potipiti; Thanee Chaiwat |
| Abstract: | Generative AI technologies such as ChatGPT, Gemini, and MidJourney have made remarkable progress in recent years. Recent literature has documented ChatGPT’s positive impact on productivity in areas where it has strong expertise—attributable to extensive training datasets—such as the English language and Python/SQL programming. However, the literature is still limited regarding ChatGPT’s performance in areas where its capabilities could still be further enhanced. In this paper, we asked participants to perform writing analysis tasks in a non-English language (specifically, Thai) and math & data analysis tasks using a less frequently used programming package (specifically Stata). The findings suggest that, on average, participants performed better using ChatGPT in terms of scores and time taken to complete the tasks. However, a detailed examination reveals that 34% of participants saw no improvement in writing analysis tasks, and 42% did not improve in math & data analysis tasks when employing ChatGPT. Further investigation indicated that higher-ability participants, as proxied by their econometrics grades, were the ones who performed worse in writing analysis tasks when using ChatGPT. We also found evidence that participants with better digital skills performed better with ChatGPT. This research provides insights on the impact of generative AI. Thus, relevant parties can make informed decisions regarding appropriate strategies, policies, and educational systems. It also highlights the critical role of human skills in addressing and complementing the limitations of AI. |
| Keywords: | ChatGPT; Generative AI; Large Language Models; Labor Productivity |
| JEL: | A20 D24 J24 O33 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:pui:dpaper:229 |
| By: | Demir, Gökay (IZA); Hertweck, Friederike (RWI – Leibniz Institute for Economic Research); Sandner, Malte (Technische Hochschule Nürnberg); Yükselen, Ipek (Institute for Employment Research (IAB), Nuremberg) |
| Abstract: | This paper analyzes the impact of college students' coworker networks formed during student jobs on their labor market outcomes after graduation. For our analysis, we use novel data that links students' administrative university records with their pre- and post-graduation employment registry data and their coworker networks. Our empirical strategy exploits variation in the timing and duration of student jobs, controlling for a variety of individual and network characteristics, as well as firm-by-occupation fixed effects, eliminating potential selection bias arising from non-random entry into student jobs and networks. The results show that students who work alongside higher-earning coworkers during their student jobs earn higher wages in their first post-graduation employment. Two key mechanisms appear to drive this effect: (1) sorting into higher-paying firms after graduation, facilitated by coworker referrals, and (2) enhanced field-specific human capital through exposure to skilled colleagues. However, the initial wage advantage from higher-earning coworker networks diminishes over time as students with worse networks catch up. Our findings contribute to the understanding of how early career networks shape labor market outcomes and facilitate a smoother transition from higher education to graduate employment. |
| Keywords: | labor market entry, student jobs, coworker networks, wages |
| JEL: | I23 J24 J31 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17541 |
| By: | Goehausen, Johannes (Leibniz Univeristät Hannover); Thomsen, Stephan L. (Leibniz University of Hannover) |
| Abstract: | We evaluate the labor market effects of an increasing supply of high-skilled labor, resulting from a higher education expansion at established German universities. Exploiting variation in exposure across regions and cohorts, we estimate early career effects for labor market entrants. We find that high-skilled wages decline initially, particularly in non-graduate jobs, but recover over the first five years of experience. Medium-skilled workers are barely affected, while low-skilled workers benefit from higher wage growth in non-routine-intensive jobs. We explain the dynamics of the effects by two countervailing mechanisms: immediate supply effects and gradual technology effects through increasing skilled labor demand. |
| Keywords: | higher education expansion, labor market entry, wages, regional labor markets |
| JEL: | I23 I26 J31 R23 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17487 |
| By: | Flavio Calvino; Luca Fontanelli |
| Abstract: | In this work we characterise French firms using artificial intelligence (AI) and explore the link between AI use and productivity. We distinguish AI users that source AI from external providers (AI buyers) from those developing their own AI systems (AI developers). AI buyers tend to be larger than other firms, but this relation is explained by ICT-related variables. Conversely, AI developers are larger and younger beyond ICT. Other digital technologies, digital skills and infrastructure play a key role for AI use, with AI developers leveraging more specialised ICT human capital than AI buyers. Overall, AI users tend to be more productive, however this is related to the self-selection of more productive and digital-intensive firms into AI use. This is not the case for AI developers, for which the positive link between AI use and productivity remains evident beyond selection. |
| Keywords: | technology diffusion, artificial intelligence, digitalisation, productivity |
| JEL: | D20 J24 O14 O33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11466 |
| By: | Prashant Loyalka; Dinsha Mistree; Robert Fairlie; Saurabh Khanna; Robert W. Fairlie |
| Abstract: | Low-income individuals in developing countries are often inadequately prepared for employment because they lack key labor market skills. We explore how employability and wage outcomes are related to English language skills in a novel, large-scale randomized field experiment conducted in Delhi, India involving 1, 260 low-income individuals. Experimental estimates indicate that a job training program that emphasizes English language skills training substantially increases English language skills as well as employability and estimated wages (as assessed by hiring managers through interviews) for regular jobs and employability for jobs that specifically require English language skills. Program effects hold regardless of gender, social class, or prior employment. We furthermore find that participants enjoy improved employability and estimated wage outcomes because the program improves their English language skills. Taken together, our results suggest that English language skills training, which is surprisingly underutilized in developing countries, may provide considerable economic opportunities for individuals from low-income backgrounds. |
| Keywords: | English, employability, opportunities, poverty reduction, field experiment |
| JEL: | J24 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11504 |
| By: | Goulas, Sofoklis (Brookings Institution); Griselda, Silvia (e61 Institution); Megalokonomou, Rigissa (Monash University); Zenou, Yves (Monash University) |
| Abstract: | How do disruptive peers shape academic and career paths? We examine this question by leveraging the random assignment of students to classrooms in Greece and identifying the effects of peer disruptiveness on academic performance and career paths. Using suspension hours as a measure of disruptiveness, we find that students assigned to more disruptive classrooms have lower academic achievement, a higher risk of grade retention, and reduced likelihood of graduating from high school on time. They are also less likely to pursue competitive STEM fields or enroll in selective postsecondary programs. The adverse effects are more pronounced for students from low-income areas, in larger classrooms, or with fewer female peers. Using a lab-in-the-field experiment, we find that exposure to multiple disruptors, compared to just one, reduces students' study motivation, college aspirations, and readiness for science studies and careers, especially for those seated closer to disruptive peers. |
| Keywords: | disruption, suspension, random classroom assignment, high school graduation, STEM careers, lab-in-the-field experiment |
| JEL: | I24 I26 J16 J24 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17539 |
| By: | Joanne Haddad; Lamis Kattan |
| Abstract: | By the end of the nineteenth century, labor legislation for women had become a prominent issue in the United States, with most states enacting at least one female-specific work regulation. We examine the impact of three previously unexplored legislation: seating, health and safety, and night-work regulations. Given that not all states adopted these laws, and the staggered nature of adoption, we rely on a difference-in-differences strategy design to estimate the effects on female gainful employment. Our findings indicate that laws regulating health and safety conditions and restricting women’s night work increased the likelihood of female employment by about 4% to 8%, accounting for about 10% to 20% from the total increase during our period of analysis. Examining heterogeneous effects reveals that younger and married women without children witnessed the largest increase in the likelihood of employment. We also document that native, higher-class and literate women were also incentivized to join the workforce. Women’s labor supply in the decades under consideration has been estimated to be quite inelastic with respect to own wage. Nevertheless, we find sizable labor force participation responses to the female-specific labor regulation we study. This indicates that the legislation must have shifted women’s labor supply curves, either because it made jobs more pleasant, or because it improved perceptions about how respectable it is for a woman to work in the labor market. Both channels would reduce disutility from work, and increase labor supply at any given wage level. Our findings hold important implications for policymakers and advocates seeking to promote gender equality in the labor market. |
| Keywords: | labor supply, labor law, gender law, gender norms |
| JEL: | J08 J16 J21 J24 J78 K31 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11546 |
| By: | Beltrametti, Luca (University of Genova); Cardullo, Gabriele (University of Genova) |
| Abstract: | This paper explores the economic effects of imperfect meritocracy in recruitment and career advancement. We compare two career promotion mechanisms: a fully meritocratic system and a "noisy" one, that allows less productive workers to advance. Our model shows that imperfect meritocracy in promotions can boost worker effort through the "hope effect, " potentially leading to higher aggregate output and total welfare compared to a strictly meritocratic system. Less skilled workers benefit most under this scenario, while the high skilled are worse off. We conclude that when perfect meritocracy in recruitment is unattainable, it may not be optimal to enforce it in career advancement, offering insights for economic policy. |
| Keywords: | meritocracy, efficiency, recruitment, career advancement |
| JEL: | A13 D61 D63 J20 M51 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17532 |
| By: | Sabrin A. Beg; Anne E. Fitzpatrick; Jason T. Kerwin; Adrienne Lucas; Khandker Wahedur Rahman |
| Abstract: | Public-sector organizations face a tradeoff: allowing workers discretion at the point of service to adapt to local needs, versus rigid harmonization to ensure uniform service delivery. We examine this tradeoff in the context of secondary schools in Odisha, India, where the centrally set curriculum is nearly 4 grades above the learning levels of the mean student. We conduct a randomized intervention that assigned schools to either a rigid or a flexible version of a remedial learning intervention that displaced the curriculum. We compare learning outcomes and teaching quality to the status quo. Both interventions increased learning by 0.11SD, about 60 percent of a year of learning, with gains throughout the learning distribution. We find no crowd-out of grade-level mastery, and no change in the likelihood of earning passing Board Marks one year later. Discretion did not lower the quality of implementation or induce shirking. Allowing teachers flexibility to adjust classroom content to student needs was beneficial and had limited downsides. |
| JEL: | H40 I25 I28 J24 M54 O15 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33242 |
| By: | John M. Barrios; Yael Hochberg; Hanyi (Livia) Yi |
| Abstract: | We investigate the influence of the growing trend of work-from-home (WFH) on new business formation, with a particular focus on the period surrounding the COVID-19 pandemic. At baseline, local new business entry is positively associated with the proportion of occupations amenable to telework in the region. Utilizing the advent of the COVID-19 pandemic and the implementation of stay-at-home mandates as an exogenous shock, we examine the effects of realized flexibility for WFH on entrepreneurial entry. While overall new business registrations increased following pandemic stay-at-home mandates, areas with an occupational mix that has higher potential for telework demonstrate less pronounced growth in new business formation, particularly in regions with lower economic demand factors. Survey evidence highlights how flexibility provided by traditional employment reduces entrepreneurial intent, especially for workers seeking non-pecuniary benefits such as autonomy or flexibility. Consistent with this substitution effect, we observe significant gender disparities, with a notable decline in women-led startups in areas with greater telework potential. Our results suggest a nuanced tension between the attractiveness of flexibility in traditional employment and the autonomy provided by entrepreneurial entry. |
| JEL: | J10 J22 L26 M13 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33237 |
| By: | Lewandowski, Piotr (Institute for Structural Research (IBS)); Szymczak, Wojciech (Institute for Structural Research (IBS)) |
| Abstract: | We study the effect of the adoption of automation technologies – industrial robots, and software and databases – on the incidence of atypical employment in 13 EU countries between 2006 and 2018. We find that industrial robots significantly increase atypical employment share, mostly through involuntary part-time and involuntary fixed-term work. We find no robust effect of software and databases. We also show that the higher trade union density mitigates the robots' impact on atypical employment, while employment protection legislation appears to play no role. Using historical decompositions, we attribute about 1-2 percentage points of atypical employment shares to rising robot exposure. |
| Keywords: | robots, automation, atypical employment, trade unions |
| JEL: | J23 J51 O33 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17544 |
| By: | Trombetta Martin; Micha Ariela; Pereyra Francisca |
| Abstract: | The COVID-19 pandemic has highlighted the importance and fragility of care systems globally, resulting in multiple new challenges for women, who comprise the majority of workers in this sector. In particular, domestic work is the main source of employment for vulnerable women in Argentina, a sector globally characterized by high degrees of informality, low pay, and precarious working conditions. In this context, digital labor platforms are emerging as new contracting intermediaries, thus raising questions on their impact in terms of the generation of new labor and income opportunities for women. This article inspects the role of platforms in the definition of working conditions for domestic workers, by considering their influence in the formalization of the sector. Empirical evidence is provided to evaluate the contribution of platforms to the establishment of formal employment contracts for domestic workers. Based on survey data from 300 women working through the sector's leading platform in the Metropolitan Area of Buenos Aires (transformed into 1048 worker-job observations), a fixed-effects model is estimated at the job level to measure the formalization effect of the platform. Results show that working through the platform almost triples the probability of landing a formal job, controlling for both observable and unobservable attributes of workers. |
| JEL: | J4 C2 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:aep:anales:4768 |
| By: | David J. Deming; Christopher Ong; Lawrence H. Summers |
| Abstract: | This paper explores past episodes of technological disruption in the US labor market, with the goal of learning lessons about the likely future impact of artificial intelligence (AI). We measure changes in the structure of the US labor market going back over a century. We find, perhaps surprisingly, that the pace of change has slowed over time. The years spanning 1990 to 2017 were less disruptive than any prior period we measure, going back to 1880. This comparative decline is not because the job market is stable today but rather because past changes were so profound. General-purpose technologies (GPTs) like steam power and electricity dramatically disrupted the twentieth-century labor market, but the changes took place over decades. We argue that AI could be a GPT on the scale of prior disruptive innovations, which means it is likely too early to assess its full impacts. Nonetheless, we present four indications that the pace of labor market change has accelerated recently, possibly due to technological change. First, the labor market is no longer polarizing— employment in low- and middle-paid occupations has declined, while highly paid employment has grown. Second, employment growth has stalled in low-paid service jobs. Third, the share of employment in STEM jobs has increased by more than 50 percent since 2010, fueled by growth in software and computer-related occupations. Fourth, retail sales employment has declined by 25 percent in the last decade, likely because of technological improvements in online retail. The post-pandemic labor market is changing very rapidly, and a key question is whether this faster pace of change will persist into the future. |
| JEL: | E24 J21 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33323 |
| By: | Gabriel M. Ahlfeldt; Fabian Bald; Duncan H.W. Roth; Tobias Seidel; Gabriel Ahlfeldt; Duncan Roth |
| Abstract: | Using a quantitative spatial model as a data-generating process, we explore how spatial frictions affect the measurement of quality of life. We find that under a canonical parameterization, mobility frictions—generated by idiosyncratic tastes and local ties—dominate trade frictions—generated by trade costs and non-tradable services—as a source of measurement error in the Rosen-Roback framework. This non-classical measurement error leads to a downward bias in es-timates of the urban quality-of-life premium. Our application to Germany reveals that accounting for spatial frictions results in larger quality-of-life differences, different quality-of-life rankings, and an urban quality-of-life premium that exceeds the urban wage premium. |
| Keywords: | housing, spatial frictions, rents, prices, productivity, quality of life, spatial equilibrium, wages |
| JEL: | J20 J30 R20 R30 R50 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11560 |
| By: | Alzate, David (World Bank); Carranza, Eliana (World Bank); Duran-Franch, Joana (OECD); Packard, Truman (World Bank); Proffen, Celina (World Bank) |
| Abstract: | This paper provides an extensive review of the literatures on product and labor market regulations and their effects on labor market outcomes. It uncovers the interdependence of these two types of regulations, an area that has received limited attention in research. The paper highlights why understanding the intricate relationship between product and labor market regulations is crucial for effective policy making and advancement of labor market conditions. The findings strongly discourage adopting uniform policies and advocate for tailored approaches to labor market promotion. |
| Keywords: | labor market regulation, product market policy, employment, wage, productivity, worker protection, firm competition, public policy |
| JEL: | J20 J30 J8 K2 L5 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17536 |
| By: | Zachary Bleemer; Aashish Mehta |
| Abstract: | Underrepresented minority (URM) college students have been steadily earning degrees in relatively less lucrative fields of study since the mid-1990s. A decomposition reveals that this widening gap is principally explained by rising stratification at public research universities, many of which increasingly prevent students with poor introductory grades from declaring popular majors. We investigate these major restriction policies by constructing a novel 50-year dataset covering four public research universities' student transcripts and employing a staggered difference-in-difference design around the implementation of 25 GPA-based restrictions. Restrictions disproportionately filter out less-prepared students with fewer pre-college academic opportunities, decreasing average URM enrollment shares by 20 percent. They do not measurably improve allocative efficiency across majors, departments' wage value-added, or filtered students' educational attainment. Using first-term course enrollments to identify students who intend to earn restricted majors, we find that major restrictions disproportionately lead URM students toward less lucrative majors, explaining nearly all growth in within-institution ethnic stratification since the 1990s. |
| JEL: | H75 I24 J31 Z13 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33269 |
| By: | Bonatti, Luigi; Lorenzetti, Lorenza Alexandra; Traverso, Silvio |
| Abstract: | This paper discusses the potential introduction of permanent public subsidies to supplement the wages of low-paid workers in Italy, taking inspiration from Edmund Phelps' ideas on supporting the working poor. We consider how a negative taxation scheme for low-wage earners might address structural labor market challenges such as low participation rates, labor market segmentation, and widespread in-work poverty. Using a stylized theoretical model, we illustrate how such subsidies could affect wages, employment, and labor supply-demand dynamics, with a particular focus on potential cost implications under different elasticity assumptions. We also consider how design features - such as targeting full-time workers or integrating the subsidy with broader social and economic reforms - could maximize the measure's impact while mitigating risks related to fraud or uneven coverage. Finally, a scenario analysis based on Italian Labor Force Survey data provides an indication of the policy's likely scale and distributional effects. The paper concludes by reflecting on both opportunities and challenges for implementing wage subsidies in Italy's segmented labor market. |
| Keywords: | Low-skilled workers, Working poor, Wage subsidies, Negative taxation |
| JEL: | D04 H20 J20 J38 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1552 |
| By: | Schib, Tobias (University of Basel); Stutzer, Alois (University of Basel) |
| Abstract: | Small-scale federal democracies depend on the active participation of individuals in local political office. Both anecdotal evidence and empirical studies across Western democracies indicate a growing difficulty in recent decades to recruit candidates for municipal offices. This study examines the impact of monetary compensation and workload on the supply of candidates for municipal councils, drawing on the economic theory of political selection. Using data from municipal elections in over 500 municipalities across three Swiss cantons since the 1970s, we apply two-way fixed effects models to analyze the relationship between compensation, workload, and candidate supply. Our findings show that higher salaries do not lead to more competitive local elections or longer terms in office. However, reducing the workload associated with municipal mandates appears to be a more effective strategy for increasing candidate supply, particularly in recruiting women. |
| Keywords: | political selection, candidate pool, compensation for public office, local council, workload |
| JEL: | D72 J45 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17524 |
| By: | González, Libertad (Universitat Pompeu Fabra); Surovtseva, Tetyana (University of Barcelona) |
| Abstract: | We analyze the impact of tourist flows on local labor markets, following a novel identification strategy that uses temporary shocks in alternative international destinations to instrument for tourism flows across Spanish regions. We find that a one standard deviation increase in tourist inflows leads to a 1 percentage-point increase in employment in the tourism industry and in other services, but it does not increase total employment, labor force participation, or wages in local economies. Instead, the positive impact on services is compensated by a fall in employment in other industries, most notably manufacturing. |
| Keywords: | employment, tourism, local labor markets, shift-share, terrorism, Spain |
| JEL: | J21 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17518 |
| By: | Celina Proffen; Franziska Riepl |
| Abstract: | This paper examines the impact of introducing birthright citizenship in Germany on the educational trajectories of second-generation immigrants. Our identification strategy exploits a legal change in 2000 that granted children of foreigners with longtime residency automatic citizenship at birth. Using high-quality census data, we show that the reform contributes to closing pre-existing educational gaps in secondary school track choice and completion. These findings also hold when relying exclusively on within-household variation across siblings. We provide evidence for the underlying mechanisms, highlighting the roles of higher expected returns to education and of an increased sense of belonging to Germany. |
| Keywords: | birthright citizenship, education, human capital, integration, immigration |
| JEL: | J15 J24 K37 O15 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11483 |
| By: | Andreas Irmen |
| Abstract: | A balanced growth path that accounts for a decline in hours worked per worker approximates the evolution of today’s industrialized countries since 1870. This stylized fact is explained in an OLG-model featuring two-period lived individuals equipped with per-period utility functions of the generalized log-log type proposed by Boppart and Krusell (2020) and a neoclassical production sector. Technological progress drives real wages up and expands the amount of consumption goods. The value of leisure increases, and the supply of hours worked declines. Technological progress moves a poor economy out of a regime with low wages and an inelastic supply of hours worked into a regime with high wages and a declining supply of hours worked. The balanced growth path is unique and stable. In the high wage regime, the equilibrium difference equation is available in closed form. A balanced growth path with declining hours worked may also be obtained with endogenous technological progress as in Romer (1986). |
| Keywords: | technological change, comparative economic development, endogenous labor supply, neoclassical endogenous growth, OLG-model |
| JEL: | D15 J22 O33 O41 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11492 |
| By: | Wolfgang Frimmel; Felix Glaser; Gerald J. Pruckner |
| Abstract: | Using high-quality administrative data from Upper Austria, we analyze the eect of hospi- tal crowding on patients' short- and medium-term healthcare utilization and labor market outcomes. Focusing on acute inpatient diagnoses, we exploit idiosyncratic variation in daily diagnosis-related hospital occupancy rates to estimate the causal eect of hospital crowding. We nd that higher crowding levels reduce hospital care intensity, as reected in fewer medical services provided, lower hospital expenditures, and earlier discharges. Despite these changes, quality of care indicators, including readmissions and mortality, remain unaected. However, no signicant eects are observed either on inpatient and outpatient healthcare utilization in the short- and medium-term or on patients' labor market outcomes following initial hospitalization. These results suggest that crowding- induced dierences in hospital care do not lead to changes in patients' health or economic situations over the medium term. |
| Keywords: | Hospital Crowding, Health Care Utilization, Labor Market |
| JEL: | I10 I12 I14 I31 J20 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:jku:econwp:2025-01 |
| By: | Matthew Freedman; David Neumark |
| Abstract: | Place-based programs aim to encourage economic and community development in defined geographic areas. They frequently offer tax incentives, grants, loans, or regulatory relief to private or non-profit entities for investing in specific communities. Funding can support a range of activities, including investments in job creation, infrastructure, workforce development, affordable housing, and more. Interest in spatially targeted interventions in the U.S. has waxed and waned over time in response to changing political environments, policy advocacy, and the evolving conclusions of academic research. The nature of place-based programs themselves has also evolved – often building on the lessons learned from past research and experience, but sometimes ignoring these lessons. In this chapter, we review what we have learned from past place-based job creation programs in the U.S. context. We also describe some of the newest developments in place-based policymaking and how recent programs’ successes and failures in heeding past lessons have contributed to their relative effectiveness. |
| JEL: | H71 J2 J38 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33272 |
| By: | Abel, Martin (Bowdoin College); Bomfim, Emma (Bowdoin College); Cisneros, Izzy (Bowdoin College); Coyle, Jackson (Bowdoin College); Eraou, Song (Bowdoin College); Gebeyehu, Martha (Bowdoin College); Hernandez, Gerardo (Bowdoin College); Juantorena, Julian (Bowdoin College); Kaplan, Lizzy (Bowdoin College); Marquez, Danielle (Bowdoin College); Mullen, Jack (Bowdoin College); Mulhern, Peyton (Bowdoin College); Opong-Nyantekyi, Ayana (Bowdoin College); Osathanugrah, Rin (Bowdoin College); Paul, Joe (Bowdoin College); Philie, Austin (Bowdoin College); Tingley, Luke (Bowdoin College); Wang, Jingyi (Bowdoin College) |
| Abstract: | We conduct an incentivized experiment with a nationally representative sample to investigate gender discrimination among people receiving advice on risky investments. Participants learn about actual start-up firms they can invest in. Before deciding how much of their endowment to invest, they receive recommendations from either female or male professionals. We find that before outcomes are revealed, participants are equally likely to follow recommendations of female and male advisors. Likewise, we observe no gender discrimination following advice that proves correct. However, for advice that turns out to be incorrect, advisor gender significantly impacts the decisions made by male participants. They invest 47% less in the direction of this advice compared to situations where male advisors were incorrect. These differences are not explained by participants' stated views on gender roles and advisors' ability as well as the level of attention towards female advisors. |
| Keywords: | gender discrimination, investment decisions, financial advising |
| JEL: | J70 G11 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17537 |
| By: | Mountford, Andrew; Wadswoirth, Jonathan |
| Abstract: | Should we think of immigration as an exogenous shock to labor supply in the receiving economy? The time series of the share of migrant labor is `Granger caused' by that of total hours worked and the average real wage in the UK economy. This suggests that immigration is, in part, determined by demand and supply effects in the labor market. In this paper we model, for the first time, immigration, wages and hours worked, as responding to demand, supply and immigration shocks at the aggregate and sectoral levels. The labor market is therefore modelled as being subject to multiple shocks at any one time, with individual shocks reinforcing and offsetting each other. We use a vector autoregression (VAR) on a time series of UK labor market variables from 2001-2019 for 35 different sectors. We find, across different identification techniques taken from the macroeconomics literature, that a fundamental component of the estimated time series process has a negative association between immigration and native wages. This shock, which can be interpreted as an `immigration shock', plays a significant role in the determination of wage growth, although its influence varies across sectors and identification methods. Indeed, immigration itself is also determined, in part, by aggregate demand and supply shocks. |
| Keywords: | Immigration, Demand, Supply, VAR, Sectoral Heterogeneity |
| JEL: | E0 F2 F6 J2 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122836 |