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on Labor Markets - Supply, Demand, and Wages |
| By: | Pierre R. Brochu; David A. Green; Thomas Lemieux; James H. Townsend |
| Abstract: | This paper proposes an empirical approach to decompose the distributional effects of minimum wages into effects for workers moving out of employment, workers moving into employment, and workers continuing in employment. We estimate the effects of the minimum wage on the hazard rate for wages, which provides a convenient way of re-scaling the wage distribution to control for possible employment effects. We find that minimum wage increases do not result in an abnormal concentration of Job Leavers below the new minimum wage, which is inconsistent with employment effects predicted by a neoclassical model. We also find that, for Job Stayers, the spike and spillover effects of the minimum wage are simply shifted right to the new minimum wage. Our findings are consistent with a model where entry wages are set according to a job ladder, and where firms anchor their internal wage structure on the minimum wage due to fairness or internal incentives issues. |
| JEL: | J31 J38 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33479 |
| By: | Grabe, Leonhard (University of Cologne); Sliwka, Dirk (University of Cologne) |
| Abstract: | We study the value of skill management in organizations. In a natural field experiment with 2, 582 service technicians, we vary managers' ability to monitor and manage employee skills. We find that removing managers' access to hard information on employee skills reduced training intensity, work performance, and job satisfaction. Combining detailed personnel records and survey data, we show that the intervention lowered employee efforts to identify training needs and managerial attention to employee development. In particular, high-skill employees received less training to broaden their skill set and, in turn, performance losses are driven by higher completion times for complex work assignments. |
| Keywords: | skill management, training, performance, field experiment |
| JEL: | J24 J28 M12 M53 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17727 |
| By: | Takuya Hiraiwa; Serguey Braguinsky; Rajshree Agarwal |
| Abstract: | Higher technical-education institutions play an important role in training industrial scientists and engineers and generating new technologies. How well they perform this role, however, depends on their ability to recruit and retain talented faculty who have alternative options in industry; moreover, such allocation of talent in academia vs. industry is conditioned by path-dependencies in the evolution of these sectors. We examine the evolution of academia-industry occupational choices and talent allocation across sectors by utilizing unique data on the census of university-educated engineers from the first 40 cohorts since the inception of higher technical education in Japan. We find that academia disproportionately attracted top talent despite an increasing pay gap with industry, which we link to the institution-building process that increased non-monetary attractiveness of academic jobs. To quantitatively examine the evolution of non-pecuniary preferences for academic careers on the supply side, we estimate a dynamic model of occupational choice and find that top graduates from later cohorts, especially those who already showed exceptional talent at early stages of education, were more likely than earlier graduates to value non-pecuniary benefits offered by academia. |
| JEL: | I25 J24 N35 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33471 |
| By: | Moens, Eline (Ghent University); Lippens, Louis (Ghent University); Vangronsvelt, Kathleen (University of Antwerp); De Vos, Ans (University of Antwerp); Baert, Stijn (Ghent University) |
| Abstract: | At a time when numerous organisations are urging a return to the office while many employees prefer to continue teleworking, it is crucial to ascertain the optimal level of telework intensity. In the present study, we determine this ideal level with respect to self-rated employee attitudes, behaviour, well-being, social relations and professional growth. Drawing on a five-wave longitudinal dataset, we apply fixed effects regression analyses to investigate associations between telework intensity and various dimensions of workplace experience. We offer more robust empirical evidence for favouring hybrid work schedules over an office-only or telework-only regime owing to significant advances in causal interpretation of linear and non-linear associations compared to the majority of existing studies that examine linear associations based on cross-sectional data. Our results point toward an inverted U-shaped association between telework intensity and self-rated job satisfaction, work-life balance, relationships with colleagues and professional development, with optimal levels peaking around 50% teleworking. For task efficiency and work concentration, the association appears to be concave with a plateau, stabilising at teleworking levels above 70%. Only between telework intensity and employer connectedness do we observe a slightly negative linear association. |
| Keywords: | telework intensity, workplace experience, hybrid work schedules, longitudinal |
| JEL: | I31 J24 J28 J32 J81 M51 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17721 |
| By: | Bengali, Leila (Yale University); Valletta, Robert G. (Federal Reserve Bank of San Francisco); Zhao, Cindy (Princeton University) |
| Abstract: | After growing substantially during the 1980s through the early 2000s, the college wage premium more recently has been largely unchanged, or stagnant. We extend the canonical production-function model of skill premiums to assess supply and demand contributions to the slowdown in the college wage premium, using annual CPS ASEC data from the early 1960s through 2023. To account for the rising importance of women in the college educated workforce, we estimate a hybrid model that incorporates components that are disaggregated by age and gender. We also allow for non-linearities and changes over time in the parameters of the aggregate production function. Our results suggest that the recent stagnation of the college wage premium primarily reflects demand factors, specifically a slowdown in the pace of skill-biased technological change. |
| Keywords: | college wage premium, educational attainment, labor supply, technological change, worker substitutability |
| JEL: | I2 J2 J3 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17717 |
| By: | Bastien Alvarez; Gianluca Orefice; Farid Toubal |
| Abstract: | This paper examines how trade liberalization-induced labor demand shocks affect wages and non-wage working conditions. Using exogenous trade shocks from EU enlargement and worker-level data, we find that export liberalization increases temporary contracts and atypical work schedules, particularly for production workers. However, it has no significant effect on wages, which may reflect firms’ ability to expand employment without raising pay due to labor supply elasticity and unemployment. Import liberalization weakly affects working conditions but, consistent with previous studies, lowers wages as firms face stronger competition and reduced labor demand. |
| Keywords: | temporary contracts, working conditions, wages, employment, Eastern European enlargement, trade liberalization |
| JEL: | F15 F16 J30 J51 J81 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11675 |
| By: | Patrick M. Kline |
| Abstract: | This chapter reviews the theory of monopsonistic wage setting, its empirical implications, and some puzzles the framework has struggled to explain. We begin by examining the fundamentals of monopsonistic wage determination. The core of the theory is a mapping from the distribution of worker outside options to wages. We study non-parametric shape restrictions that ensure this mapping is unique. Building on these results, we introduce a menu of tractable parametrizations of labor supply to the firm, some of which are shown to emerge naturally from equilibrium search models. Next, we review why wage markdowns do not necessarily signal inefficiency and discuss some criteria for assessing misallocation in a monopsony model with search frictions. Turning to the model’s empirical implications, we examine how the magnitude of productivity-wage passthrough depends on the super-elasticity of labor supply to the firm and establish that compensating differentials for firm amenities depend on the curvature of the outside option distribution. We show that firm-specific shifts in either productivity or amenities can be used as instruments to identify labor supply elasticities and review strategies for estimating non-constant elasticities. We then consider extensions of the basic model involving third-degree wage discrimination and examine their ability to rationalize patterns of worker-firm sorting. Monopsony models traditionally assume that firms commit to posted wages. Relaxing this assumption, we develop a connection between the first-order conditions of the monopsony model and models of bargaining with incomplete information. These models explain why bilateral inefficiencies may persist in the presence of negotiation, yield predictions about the response of within-firm wage dispersion to productivity shocks, and suggest reasons why some productivity shifters may not constitute excludable instruments. Next, we endogenize productivity by allowing for efficiency wages, non-constant returns to scale, and price-cost markups. Empirical monopsony estimates often suggest that firms enjoy implausibly large profit margins. We argue that allowing for non-constant labor supply elasticities and firm adjustment costs can potentially resolve this difficulty. Finally, we review why the strong passthrough of minimum wages to product prices presents a challenging puzzle for standard monopsony models and discuss potential reconciliations to this puzzle involving firm heterogeneity, quality changes, and lumpy price adjustment. |
| JEL: | J30 J42 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33467 |
| By: | Bryson, Alex (University College London); Forth, John (City St George's, University of London); Green, Francis (Institute of Education, University of London) |
| Abstract: | Using linked employer-employee data from the British Workplace Employment Relations Survey we examine how much of the variation in job quality is accounted for by establishment-level variation, and the relative importance of the establishment compared with occupation and employee characteristics. We do so for pay, six dimensions of non-pay job quality and overall job quality. We show that the establishment is the dominant explanatory factor for non-pay job quality, and as important as occupation in accounting for pay. Where you work accounts for between 38% and 76% of the explained variance in job quality, depending on the dimension. We also find that establishments which are 'good' on one dimension of non-pay job quality are 'good' on others. When we relate the estimated establishment effects (after allowing for the effects of occupation and of employee characteristics) to observed establishment characteristics, we find that non-pay job quality is greater in smaller establishments. |
| Keywords: | job quality, decomposition, establishment |
| JEL: | J31 J32 M50 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17724 |
| By: | Adler, Katharina (University of Würzburg); Kosse, Fabian (University of Würzburg); Nagler, Markus (Friedrich Alexander Universität Erlangen-Nürnberg, Germany); Rincke, Johannes (University of Erlangen-Nuremberg) |
| Abstract: | How do students' earnings expectations differ by being the first in their family to attend university (FiF) and how do they affect field of study choice? We leverage unique survey and administrative data from a German university to document sizable gaps in expected earnings between FiF and non-FiF students. Our data can explain two-thirds of this gap, with the largest share attributable to field of study choice. We show that FiF students sort less into study fields based on their earnings expectations. Investigating potential explanations, we find that they expect lower own ability and worse non-wage amenities in high-earning fields. |
| Keywords: | earnings expectations, higher education, first-generation, socio-economic gaps |
| JEL: | I23 I24 I26 J24 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17720 |
| By: | Jose Garcia-Louzao; Linas Tarasonis |
| Abstract: | Using Social Security records between 2000 and 2020, we provide a comprehensive analysis of labor earnings inequality and its dynamics over the course of Lithuania’s economic development. Since 2000, there has been a substantial decline in earnings inequality, largely driven by the rapid growth of earnings at the bottom of the distribution, while earnings volatility has hardly changed. Importantly, we estimate a relatively high sensitivity of earnings growth to changes in real GDP, which declines with the level of permanent income. Additionally, we find that the idiosyncratic earnings risk of individuals at the bottom of the permanent income distribution is less sensitive to aggregate growth than that of individuals in the top half. Taken together, our findings underscore that analyzing earnings risk is critical to properly understanding the dynamics of inequality and designing effective policies to address it. |
| Keywords: | income inequality, income risk, income mobility, administrative data |
| JEL: | D31 E24 J31 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11680 |
| By: | Herbst, Chris M. (Arizona State University); Tekin, Erdal (American University) |
| Abstract: | The composition and quality of the child care workforce may be uniquely sensitive to changes in the complementarities between home production and market work. This paper examines whether the expansion of oral contraceptives and abortion access throughout the 1960's and 1970's influenced the composition, quality, and wages of the child care workforce. Leveraging state-by-birth cohort variation in access to these reproductive technologies, we find that they significantly altered the educational profile of child care workers—increasing the proportion of less-educated women in the sector while reducing the share of highly-educated workers. This shift led to a decline in average education levels and wages within the child care workforce. Furthermore, access to the pill and abortion influenced child care employment differently across settings, with center-based providers losing more high-skilled workers to alternatives with better career opportunities, and home-based and private household providers absorbing more low-skilled women, for whom child care may have remained a viable employment destination. Overall, our findings indicate that increased reproductive autonomy, while expanding women's access to higher-skilled and -paying professions, also resulted in a redistribution of skilled labor away from child care, which may have implications for service quality, child development, and parental employment. |
| Keywords: | abortion, child care, pill, contraceptive, reproductive technology |
| JEL: | I21 I38 J13 J22 J24 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17725 |
| By: | Andersen, Simon Calmar (Aarhus University); Michel, Bastien (Aarhus University); Nielsen, Helena Skyt (Aarhus University) |
| Abstract: | We study the effect of peer coaching separately from the effect of training on teachers' implementation of new teaching techniques. We conducted a preregistered field experiment involving 68 teachers and 1, 490 students in Denmark. Teachers in an active control group took part in a teaching program that introduced new teaching techniques. On top of the teaching program, the treatment group received coaching from peers. External observers, blinded to the treatment status, assessed teachers' use of the program techniques in the classroom. While we observe increased transfer to teachers' practices, the overall effects are mixed, calling for caution. |
| Keywords: | coaching, knowledge transfer, school teachers, field experiment |
| JEL: | I21 J24 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17728 |
| By: | Faieta, Elena (University of Essex); Feng, Zhexin (University of Essex); Serafinelli, Michel (King's College London) |
| Abstract: | A quarter of the population in high-income countries lives in rural areas. However, existing empirical evidence on these areas in OECD countries is scarce. Over the past several decades, many rural areas have been declining. Nevertheless, it is unclear whether these struggling rural areas are representative of the broad experience of the universe of rural areas. This paper provides a comprehensive analysis of employment evolutions for rural areas in Western Europe during the period 1970–2010. We first analyse 846 rural areas in France, Germany, Italy and the UK, and document large differences in overall employment growth across rural areas in all four countries. A sizable fraction of rural areas lost employment. However, employment in a significant number of rural areas grew during this period. The 90–10 percentile difference in decadal total employment growth of rural areas is 17.4 log points, representing an economically large difference. We then show, using data for Italy and the UK, that changes in the industry structure are fast in rural areas. The estimates also indicate that industry turnover is positively associated with employment growth. Moreover, the evidence shows that areas with stronger total employment growth exhibit stronger employment growth in the manufacturing of food and beverages. All conclusions are similar for rural remote areas. Taken together, our results lend support to the hypothesis that rural economies are not static entities; change is common in these areas, and employment evolutions often result from industry-level dynamics. |
| Keywords: | rural employment, spatial heterogeneity, industry turnover |
| JEL: | R12 R32 J21 R11 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17715 |