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on Labor Markets - Supply, Demand, and Wages |
| By: | Namrata Kala; Elizabeth Lyons |
| Abstract: | How managers frame the adoption of organizational practices may impact the returns to such practices, but managerial justification is often correlated with the use of particular practices or other dimensions of managerial quality. Using a randomized control trial, we study how the causal impacts of a frequently used monitoring management practice for remote work employers–digital worker surveillance–varies by randomly allocated justification for its use. In an online labor market, we divide workers into low and high-productivity performers, and randomize both whether surveillance is used and whether its use is justified based on the workers’ baseline productivity. We find that digital surveillance does not have significant effects on worker performance on average, but that not explaining the presence or elimination of digital surveillance based on worker performance significantly reduces worker output. Our results demonstrate a nuanced relationship between monitoring and worker performance that depends on how monitoring is rationalized to workers. |
| JEL: | J24 J28 J53 M54 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33348 |
| By: | Matthew R. Denes; Spyridon Lagaras; Margarita Tsoutsoura |
| Abstract: | Platform intermediation of goods and services has considerably transformed the U.S. economy. We use administrative data on U.S. tax returns to study the role of the gig economy on entrepreneurship. We find that gig workers are more likely to become entrepreneurs, particularly those who are lower income, younger, and benefit from flexibility. We track all newly created firms and show that gig workers start firms in similar industries as their gig experience, which are less likely to survive and demonstrate higher performance. Overall, our findings suggest on-the-job learning promotes entrepreneurial entry and shifts the types of firms started by entrepreneurs. |
| JEL: | G30 J21 J22 J24 L26 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33347 |
| By: | Arellano-Bover, Jaime (Yale University); Bianchi, Nicola (Northwestern University); Lattanzio, Salvatore (Bank of Italy); Paradisi, Matteo (Einaudi Institute for Economics and Finance) |
| Abstract: | This paper studies the interaction between the decrease in the gender pay gap and the stagnation in the careers of younger workers, analyzing data from the United States, Italy, Canada, and the United Kingdom. Our findings highlight the importance of labor-market entry to understand the shrinking of the gender pay gap. The entire decline in the aggregate pay gap originates from (i) newer worker cohorts who enter the labor market with smaller-than-average gender pay gaps and (ii) older worker cohorts who exit with higher-than-average gender pay gaps. Convergence at labor-market entry originates primarily from younger men's positional losses in firms' hierarchies and the overall pay distribution. We propose an explanation by which a larger supply of older workers can crowd out younger workers from a limited number of top-paying positions. These negative career spillovers disproportionately affect the career trajectories of younger men because they were more likely than younger women to hold higher-paying jobs at baseline. Consistent with this aging-driven crowd-out interpretation, younger men experience the largest positional losses within the hierarchies of firms that are more exposed to workforce aging. These findings hold after controlling for alternative explanations for the progressive closure of the gender pay gap at labor-market entry. Finally, we document that labor-market exit has been the sole contributor to the decline in the gender pay gap after the mid-1990s, indicating that without structural breaks, the closure of the gender pay gap is unlikely in the foreseeable future. |
| Keywords: | gender gap, workforce aging, cohort turnover, wage growth, labor-market entry, entry wages, initial conditions, age pay gap |
| JEL: | J16 J31 J11 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17621 |
| By: | Anna Herget; Regina T. Riphahn |
| Abstract: | Many countries subsidize low-income employments or small jobs. These subsidies and their phasing out can generate labor market frictions and distort incentives. The German Minijob program subsidizes low-income jobs. It generates a 'Minijob trap' with substantial bunching along the earnings distribution. Since 2003, the newly introduced Midijob subsidy aims to reduce the Minijob-induced notch in the net earnings distribution. Midijobs reduce payroll taxes for employments above the Minijob earnings ceiling. We investigate whether introducing Midijobs reduced the Minijob trap. We apply a regression discontinuity design using administrative data and a difference-in-differences estimation using survey data. While in both cases our results show a small positive overall effect of Midijobs on transitions out of Minijobs, they are effective only for a narrow treatment group. |
| Keywords: | Midijobs, Minijobs, payroll tax subsidy, causal effects, difference-in-differences, regression discontinuity, SOEP, SIAB |
| JEL: | J21 J38 H24 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11605 |
| By: | Brotherhood, Luiz; Da Mata, Daniel; Santos, Cezar; Guner, Nezih; Kircher, Philipp |
| Abstract: | This paper investigates informal employment in Brazil's highly regulated labor market, focusing on the intensive margin of informality within formal firms. Using a comprehensive dataset of labor audits conducted from 1997 to 2012, we find that formal firms caught with informal workers face sustained slower growth. Informal workers are found across firms of all sizes, and their characteristics closely resemble those of formal employees. Building on these empirical findings, we develop a dynamic general equilibrium model where firms balance the flexibility of informality against potential costs. Our framework can be used to explore government policy implications and to examine the impact of audit strategies on informality, output, and workers welfare. |
| JEL: | J01 H20 J2 L11 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13864 |
| By: | Patrick Bayer; Kerwin Kofi Charles; Ellora Derenoncourt |
| Abstract: | In this chapter, we introduce a new framework for studying the evolution of racial inequality in the labor market. The framework encompasses two broad forces – distributional and positional – that affect labor market gaps by racial and ethnic identity over time. We provide long-run results on the evolution of Black-White earnings gaps, including new results for Black and White women, and we review the evidence on historical factors affecting racial gaps. We then provide new results on racial gaps among other groups in the U.S. and discuss the evidence on racial gaps outside the U.S. We then discuss the role of prejudice-based discrimination in driving racial gaps, particularly in the post-civil-rights era, a period when such discrimination has been thought to play a declining role in racial inequality. We describe forces that can amplify existing discrimination, such as monopsony and workers’ perceptions of prejudice in the economy, and we discuss recent literature directly measuring discrimination through expanded audit studies and quasi-experimental variation. We conclude with a discussion of existing and new frontiers on race in the labor market, including stratification, reformulations of prejudice, and understanding the way race has shaped purportedly race-neutral institutions throughout the economy. |
| JEL: | J15 J31 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33372 |
| 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 enforce GPA restriction policies that prohibit students with poor introductory grades from declaring popular majors. We investigate these GPA restrictions 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 29 restrictions. Restricted majors’ average URM enrollment share falls by 20 percent, which matches observational patterns and can be explained by URM students’ poorer average precollege academic preparation. Using first-term course enrollments to identify students who intend to earn restricted majors, we find that major restrictions disproportionately lead URM students from their intended major toward less-lucrative fields, driving within-institution ethnic stratification and likely exacerbating labor market disparities. |
| Keywords: | higher education, racial wage gap, college majors |
| JEL: | H75 I24 J31 Z13 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11601 |
| By: | Fuinhas, José Alberto; Javed, Asif; Sciulli, Dario; Valentini, Edilio |
| Abstract: | Governments across the globe are implementing stricter environmental policies to combat climate change and promote sustainability. This study contributes to the growing literature exploring the influence of environmental policy on skill-biased employment across various occupations. Specifically, we examine the causal effect of the revised version of Environmental Policy Stringency Index (EPS) and its components on skill-biased employment, focusing on occupations such as managers, professionals, technicians, and manual workers across 21 European economies from 2008 to 2020. Using the Method of Moments Quantile Regression (MMQR), the findings reveal that stringent environmental policies affect employment shares across different occupational categories. Skilled workers tend to benefit more from such policies, with a notable increase in the employment of professionals across all policy measures and a more differentiated impact among technicians and managers. In contrast, manual workers are generally adversely affected by environmental policies. These asymmetric effects on occupations exacerbate labour market inequalities, including disparities in employment levels and potential earnings. This research highlights the importance of designing tailored policies to mitigate adverse labour market outcomes while facilitating a transition to sustainable economic practices. |
| Keywords: | Climate Change, Environmental Economics and Policy, Labor and Human Capital, Sustainability |
| Date: | 2025–01–17 |
| URL: | https://d.repec.org/n?u=RePEc:ags:feemwp:349167 |
| By: | Anish Sugathan; Arpit Shah; Deepak Malghan |
| Abstract: | This study quantifies the dynamic impacts of floods on industrial capital and labor in India using a novel dataset combining geocoded flood events with firm facility-level data from 2000 to 2021. Employing a stacked difference-in-differences approach with carefully matched controls, we uncover persistent negative effects of floods on firms’ assets and employment, with striking heterogeneity across sectors and regions. In the post-flood period, we estimate declines from mean values in total assets of 46.1% (16.68 billion INR ? 225 million USD), employment of 49.0% (8.20 thousand workers), and the wage bill of 74.5% (5.52 billion INR ? 74 million USD). The sectoral impacts are highly varied: the information technology and communication, manufacturing, and utilities sectors experience significant declines in assets, while the financial services sector exhibits growth. Mapping the spatial distribution of flood events and industrial facilities reveals pronounced regional heterogeneity in flood exposure and economic impacts. Adding nuance to the empirical investigation of the “creative destruction” hypothesis, we find limited evidence of systematic capital reallocation toward better-performing sectors, suggesting instead that floods generate sector-specific impacts with varying recovery patterns. These findings challenge assumptions of rapid post-disaster equilibration and have important implications for policymakers and firm managers in developing sector-specific strategies to mitigate the adverse impacts of floods in an increasingly climate-uncertain world. |
| Date: | 2024–12–03 |
| URL: | https://d.repec.org/n?u=RePEc:iim:iimawp:14718 |
| By: | Diego A. Comin; Xavier Cirera; Marcio Cruz |
| Abstract: | This paper examines technology sophistication in establishments. To comprehensively measure technology sophistication, we create a grid that covers key business functions and the technologies used to conduct them. Analyzing data from over 21, 000 establishments in 15 countries, we find that the most widely used technology is usually not the most sophisticated available in the business function. There is significant variation in technology sophistication across and within countries, explaining 31% of productivity dispersion and over half of the agricultural productivity gap. The sophistication of widely used technologies is more relevant for productivity than the most advanced technologies. More sophisticated technologies are appropriate for both developed and developing countries. |
| JEL: | O1 O3 O4 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33358 |
| By: | Borooah, Vani |
| Abstract: | The link between income and happiness is often explained by the Easterlin paradox: income and happiness in a country are positively related at a point in time but unrelated, over time. So, at any point in time, money did buy happiness but, over time, the level of happiness in a country did not rise by much as it grew richer. This paradox was explained by the fact that higher income conferred two benefits to individuals: consumption benefits (in the sense of being able to afford more, and better, goods and services) and status benefits (in the sense of enjoying superior status relative to one’s peers). But what is not clear is the identity of comparator group for the purpose of deriving status benefits. This chapter uses a novel set of data to define parents as the comparator group and defines the status a person derives from their income in relation their parents’ income. Another issue in the amount of happiness that one can extract from income concerns the circumstances in which it is earned. Given that paid employment is central to the lives of many individuals, and that many persons spend a substantial part of their lives in paid employment, an understanding of people’s feelings of well-being in the workplace or, equivalently, their levels of “job satisfaction”, is of paramount importance to public policy. This chapter examines the strength of a variety of factors in determining the intensity of job satisfaction in 33 countries. The empirical foundation for the study is provided by data for nearly 22, 000 employed respondents, pertaining to the year 2000, obtained from the World Values Survey. |
| Keywords: | Income, Job Satisfaction, Inter-Generational |
| JEL: | I3 J3 J31 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123250 |
| By: | Elacqua, Gregory; Rodrigues, Mateus; Rosa, Leonardo |
| Abstract: | Teacher turnover is a major challenge for human resource management in schools, adversely affecting student learning. We examine the impact of a monetary incentive program introduced in 2022 in the city of Sao Paulo, Brazil, which aims to reduce teacher turnover by allocating wage premiums ranging from 5% to 25% of base salary based on schools turnover levels. Our results show a significant reduction in turnover: an average decrease of 18% across all schools, with an even more pronounced 30% reduction in schools offering higher incentives. Notably, the program also attracted new teachers to these higher-incentive schools. An analysis of teacher preferences similarly reveals a shift towards schools offering greater wage premiums. Furthermore, we find that schools offering high incentives experienced significant improvements in student test scores, with gains of 0.3-0.6 standard deviations in standardized assessments. The findings demonstrate the effectiveness of monetary incentives in mitigating teacher turnover and improving educational outcomes, providing evidence-based guidance for policymakers developing teacher retention strategies. |
| Keywords: | Teachers;financial incentives;teacher shortage;Teacher sorting;turnover rates;disadvantaged schools |
| JEL: | I21 J45 J63 M52 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13950 |