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on Labor Markets - Supply, Demand, and Wages |
| By: | Anders Humlum; Emilie Vestergaard |
| Abstract: | We examine the labor market effects of AI chatbots using two large-scale adoption surveys (late 2023 and 2024) covering 11 exposed occupations (25, 000 workers, 7, 000 workplaces), linked to matched employer-employee data in Denmark. AI chatbots are now widespread—most employers encourage their use, many deploy in-house models, and training initiatives are common. These firm-led investments boost adoption, narrow demographic gaps in take-up, enhance workplace utility, and create new job tasks. Yet, despite substantial investments, economic impacts remain minimal. Using difference-in-differences and employer policies as quasi-experimental variation, we estimate precise zeros: AI chatbots have had no significant impact on earnings or recorded hours in any occupation, with confidence intervals ruling out effects larger than 1%. Modest productivity gains (average time savings of 3%), combined with weak wage pass-through, help explain these limited labor market effects. Our findings challenge narratives of imminent labor market transformation due to Generative AI. |
| JEL: | J23 J24 J31 O33 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33777 |
| By: | Alan Kwan; Ben Matthies; Richard R. Townsend; Ting Xu |
| Abstract: | Using a novel firm-level remote work measure created from big data on Internet activity, we show that firms with higher remote work during the pandemic are more likely to see their employees becoming entrepreneurs. This effect holds both unconditionally and relative to other types of job turnovers. We establish causality using instrumental variables and a panel event study. The marginally created businesses are higher quality than the average new firm. The effect is not driven by employee selection, preference change, or forced turnover. Rather, remote work increases spawning by providing the time and downside protection needed for entrepreneurial experimentation. |
| JEL: | E32 J22 J24 L26 M13 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33774 |
| By: | Fedele, Alessandro (Free University of Bozen/Bolzano); Tonin, Mirco (Free University of Bozen/Bolzano); Wiesen, Daniel (University of Cologne) |
| Abstract: | The health sector requires skilled, altruistic, and motivated individuals to perform complex tasks for which ex-post incentives may prove ineffective. Understanding the determinants of self-selection into health professions is therefore critical. We investigate this issue relying on data from surveys and incentivized dictator games. We compare applicants to medical and healthcare schools in Italy and Austria with non-applicants from the same regions and age cohorts. Drawing on a wide range of individual characteristics, we employ machine learning techniques for variable selection. Our findings show that higher cognitive ability, greater altruism, and the personality trait of conscientiousness are positively associated with the likelihood of applying to medical or nursing school, while neuroticism is negatively associated. Additionally, individuals with a strong identification with societal goals and those with parents working as doctors are more likely to pursue medical education. These results provide evidence of capable, altruistic, and motivated individuals self-selecting into the health sector, a necessary condition for building a high-quality healthcare workforce. |
| Keywords: | personality traits, cognitive ability, altruism, health professions, self-selection, machine learning |
| JEL: | I1 J24 J4 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17941 |
| By: | Alex Bryson; John Forth; Lucy Stokes; Van Phan; Carl Singleton; Felix Ritchie; Damian Whittard |
| Abstract: | Most studies of ethnic wage gaps rely on household survey data. As such, they are unable to examine the degree to which wage gaps arise within or between firms. We contribute to the literature using high quality employer-employee payroll data on jobs, hours, and earnings, linked with the personal and family characteristics of workers from the population census for England and Wales. We reveal substantial unexplained wage gaps disadvantaging ethnic minority groups among both women and men. These disparities occur predominantly within firms rather than between them and are especially pronounced among higher earners. The patterns vary significantly by gender and by ethnic minority group compared to white workers. Since most of the wage disadvantage for ethnic minorities is within-firm, our results suggest that the UK's recent legislative reforms on firm-level gender pay gap reporting should be expanded to encompass ethnicity pay gaps. |
| Keywords: | Employer-Employee Data, Unconditional Quantile Regression, Decomposition Methods, UK Labour Market |
| JEL: | J24 J62 I10 |
| URL: | https://d.repec.org/n?u=RePEc:nsr:niesrd:570 |
| By: | Dean Hyslop (Motu Economic and Public Policy Research); David Maré (Motu Economic and Public Policy Research); Lily Stelling (University of Queensland) |
| Abstract: | This paper addresses the effects of dramatic increases in minimum wages on wage inequality in New Zealand since 2000. Over this period the adult minimum wage increased more than 75% in CPI-adjusted real terms, and applicable minimum wages for teenagers increased by more than 200%. There has been broad-based wage growth across the distribution, with remarkably stable growth of about 30% (1.2% per annum) across the top-half of the wage distribution, and substantially stronger at lower quantiles (up to 66% at the 5th percentile). This has compressed the lower tail, and reduced wage inequality: between 1997-2000 and 2020-2023, the standard deviation of log(wages) fell by 16%, while the log-difference between the 50th and 10th percentiles of wages (50-10 gap) fell by 28% compared to a small (4%) increase in the 90-50 gap. Adapting the DiNardo, Fortin and Lemieux (1996) methodology to assess the contributions of changes in worker characteristics, economic (wage) returns to characteristics and the minimum wage to changes in wage inequality over this period, we conclude that minimum wage increases explain most of the reduction in wage inequality (about 90% of the 50-10 change, and 70% of the change in the standard deviation of log(wages)), while changes in worker characteristics modestly increased wages and inequality, and changes in returns reduced inequality slightly. However, there has been an unexplained increase in the density between the recent minimum and median wages: differences between male and female wage changes are consistent with recent pay equity settlements being a contributing factor, together with minimum wage spillover effects. |
| Keywords: | Minimum wages, wage distribution, wage inequality, spillovers |
| JEL: | J31 J38 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:mtu:wpaper:25_04 |
| By: | Langen, Henrika (BIBB); Laine, Liisa (University of Missouri) |
| Abstract: | We study the impact of a teacher strike on students still in compulsory school and about to choose their secondary education track. Using administrative data and a difference-in-differences approach, we estimate the effect of a regional strike in Finland on educational attainment and long-term labor market outcomes. On average, we find no statistically significant effect on attainment across exposed students. However, students from high-income households were more likely to pursue general education rather than vocational degrees, while those from low-income households shifted away from general education. Despite these differences, both groups experienced modest gains in income and employment later in life. |
| Keywords: | teacher strike, administrative data, effect heterogeneity, difference-in-differences, doubly robust estimation |
| JEL: | I21 I24 J24 C23 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17937 |
| By: | Joan Costa-Font; Cristina Vilaplana-Prieto; Joan Costa-i-Font |
| Abstract: | We study the impact of the Brexit referendum on the quality of employment and working conditions of workers in the National Health Service (NHS). Using a difference-in-differences (DiD) design and propensity score matching to compare NHS employees with a control group referring to occupations less exposed to employees from the European Union (EU) before Brexit. We document that Brexit led to the average reduction of job satisfaction by 1.39% - largest for physicians (2.6%) and nurses (2.4%) - and an increase of both paid (1.75 hours/week) and unpaid working hours (8.3 hours/week). Nonetheless, the effect was heterogeneous despite the general rise in working time. Indeed, job satisfaction fell by 2.6% among British workers but increased by 3% among overseas workers. These changes were accompanied by a comparable reduction in leisure time and a higher likelihood of workers intending to leave their jobs, suggesting broader behavioural effects that may undermine NHS productivity. |
| Keywords: | job satisfaction, workforce motivation, Brexit, health care workforce, workforce composition, leisure satisfaction, NHS |
| JEL: | I12 J22 J45 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11876 |
| By: | Nicolas Gonzalez-Pampillon; Javier Vazquez-Grenno |
| Abstract: | This paper examines the impact of a substantial minimum wage increase in Uruguay - a middle-income developing economy - on wages and employment. Using administrative data and a difference-in-differences approach, we analyze the consequences of a 2005 policy reform that raised the real minimum wage by 80% within a year. Our findings show that the reform led to significant wage gains for low-wage earners, with at most minimal negative effects on employment. Survey data further reveal no significant changes in unemployment or informality, suggesting the reform did not distort labor market dynamics. To contextualize these results, we investigate compliance with minimum wage laws and document a post-reform decline in compliance, particularly among low-wage workers. This pattern aligns with firms' cost-benefit trade-offs under weak enforcement of wage regulations. Our study contributes to the literature by providing causal evidence on the labor market effects of minimum wage policies in a developing economy, underscoring the pivotal role of enforcement in shaping policy outcomes. |
| Keywords: | minimum wage, labour market, compliance with the law |
| Date: | 2025–04–29 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2096 |
| By: | Eleanor W. Dillon; Sonia Jaffe; Nicole Immorlica; Christopher T. Stanton |
| Abstract: | We present evidence on how generative AI changes the work patterns of knowledge workers using data from a 6-month-long, cross-industry, randomized field experiment. Half of the 7, 137 workers in the study received access to a generative AI tool integrated into the applications they already used for emails, document creation, and meetings. We find that access to the AI tool during the first year of its release primarily impacted behaviors that workers could change independently and not behaviors that require coordination to change: workers who used the tool in more than half of the sample weeks spent 3.6 fewer hours, or 31% less time on email each week (intent to treat estimate is 1.3 hours) and completed documents moderately faster, but did not significantly change time spent in meetings. |
| JEL: | L23 M1 M15 M5 O33 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33795 |
| By: | Li, Mingjian |
| Abstract: | This study examines whether Medicaid expansion under the Affordable Care Act (ACA) led to strategic income reductions to qualify for coverage. Using monthly data from the Survey of Income and Program Participation (2013–2019) and a regression discontinuity design, this paper finds that childless households in expansion states with earnings just above the eligibility threshold reduced their lowest monthly earnings by 39 percentage points of the Federal Poverty Level (roughly $700 for a two-person household) relative to those just below. The effect intensified as the mandate penalty increased and diminished after its repeal. Evidence suggests earnings adjustments along both intensive and extensive margins. The paper reinforces the validity of using the lowest monthly earning to identify Medicaid eligibility and provides the first evidence of a substantial labor supply response to the ACA |
| Keywords: | Medicaid; The ACA; Mandate Penalty; Labor Supply; Earning Adjustments |
| JEL: | H31 I13 I18 J22 |
| Date: | 2025–05–29 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125043 |
| By: | Massimo Anelli; Felix Koenig |
| Abstract: | We develop a revealed preference approach to measure the value of workplace amenities by analyzing how variation in non-wage job attributes affects excess mass in the earnings distribution at budget discontinuities. The approach formalizes the idea that workers are less responsive to monetary incentives when amenities constitute a larger share of total compensation. Applying this method to workplace safety during COVID-19 waves, we find that workers are willing to sacrifice 9% of their earnings to reduce weekly fatality risks by one in 100, 000. The findings suggest that conventional hedonic regressions substantially under-estimate the value of workplace safety. |
| Keywords: | non-wage amenities, labor supply, bunching, workplace safety, value of life, job satisfaction |
| Date: | 2025–05–06 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2100 |
| By: | Choi, Eleanor J. (Hanyang University); Hwang, Jisoo (Harvard University); Son, Hyelim (University of Seoul) |
| Abstract: | This study examines the effects of timing of exposure to the Asian financial crisis on higher education and early labor market outcomes. We estimate a generalized difference-in-differences model exploiting variation in age at exposure and regional severity of the recession in South Korea. Using the Census and Youth Panel data, we find that individuals from hard-hit regions are less likely to attain a college education, tend to shift away from humanities to STEM majors, and have lower-quality first jobs, than their peers in the same cohort. These effects are more pronounced among individuals who experienced the recession at younger ages. |
| Keywords: | college major, college education, economic crisis, early labor market outcomes |
| JEL: | E32 I21 J24 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17938 |
| By: | Conti, Laura (Bank of Italy); Francesconi, Marco (University of Essex); Papini, Giulio (Bank of Italy); Serafinelli, Michel (King's College London) |
| Abstract: | This paper documents how the local labor market (LLM) responds to a change in touristic attractiveness. Leveraging largely underutilized data from several sources, we exploit a unique classification of Italian localities based on their main touristic assets and aggregate trends in foreign tourists' choices in a shift-share research design. Looking at all LLMs, we find a strong positive relationship between changes in attractiveness and changes in the local tourism-related economic activity, with a positive impact on tourism expenditure and tourism employment, but no effect on total employment. In high-unemployment LLMs, however, we find evidence of sizable total employment effects and large indirect effects generated through industries related to tourism and firms in the nontradable sector. We observe no effects on wage growth. We discuss our results in the context of the current policy debate on the role of tourism in the development of the local economy. |
| Keywords: | tourism, job growth, unemployment, local spillovers, heterogeneity |
| JEL: | J21 R11 R12 R23 Z30 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17933 |
| By: | Gimenez-Nadal, José Ignacio (University of Zaragoza); Molina, José Alberto (University of Zaragoza); Velilla, Jorge (University of Zaragoza) |
| Abstract: | Social connection is a key determinant of emotional well-being, yet the role of solitude in shaping both momentary affect and overall life satisfaction remains understudied. This paper investigates how being alone while engaging in daily activities relates to subjective well-being, using rich time-use diary data from the UK covering four distinct periods: pre-pandemic (2015–2016), the Covid-19 lockdowns (2020–2021), the relaxation phase (2021), and the post-pandemic period (2023). We find that being alone is negatively associated with momentary enjoyment, particularly in the post-pandemic period, but not during lockdowns or the initial relaxation phase, suggesting that the emotional cost of solitude depends on its perceived voluntariness and social norms. The enjoyment penalty is strongest for leisure and unpaid work episodes, and most pronounced among remote workers. We also document a negative association between full-day solitude and overall life satisfaction, but only during the relaxation phase, suggesting that solitude can impose both short-term and longer-term costs of well-being, depending on the social context and type of activity. |
| Keywords: | lockdown, COVID-19, life satisfaction, instant enjoyment, well-being, time use data |
| JEL: | J16 J22 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17932 |
| By: | Gustafsson, Johan (Department of Economics, Umeå University); Lanot, Gauthier (Department of Economics, Umeå University) |
| Abstract: | We analyze the impact of increased automation on the size and distribution of pension benefits, as well as on the optimal size and design of public pension systems. To this end, we build an overlapping generations model of a closed economy with heterogeneous agents who make decisions regarding skill formation, consumption, savings, and retirement. Automation is conceptualized either in terms of capital-skill complementarity or in a task-based fashion. We find that any productivity gains from automation, realized as increased capital returns, disproportionately benefit high-skilled workers who are less dependent on illiquid public pensions. A redistributive pension system can reduce public pension inequality but may increase inequality in private retirement savings. In our calibrated economy, the optimal size of the pension system is larger in the task-based specification, where the displacement effects of automation are accounted for. |
| Keywords: | Automation; General Equilibrium; Overlapping Generations; Public Pensions |
| JEL: | H55 J22 J26 |
| Date: | 2025–06–13 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:umnees:1036 |
| By: | Alexandra Brown |
| Abstract: | Poor health impacts labour supply in varied and complex ways. This paper examines an under†explored aspect of this relationship: how suffering a health shock affects occupational mobility. Occupational changes commonly follow health shocks. Individuals are 10†15 per cent more likely to change occupation or employer in subsequent months relative to those who remain healthy. I document how these newly chosen occupations differ from the occupation mobility patterns of the healthy. Those who newly report a physical disability switch to less cognitive and less manual occupations, and those who report worsening mental health switch to less cognitive occupations, relative to their healthy counterparts. However, people whose health worsens do not change the interpersonal task intensity of their occupation. Lower cognitive intensity jobs consist of less complex tasks and fewer responsibilities, while less manual jobs can be less physically demanding for those with certain health conditions. Individuals who do not hold a degree and report worsening mental health appear to be particularly vulnerable; the largest declines in overall task intensity occur among this group |
| Keywords: | Health economics, labour markets |
| JEL: | J24 J62 I10 |
| URL: | https://d.repec.org/n?u=RePEc:nsr:niesrd:569 |
| By: | Haeckl, Simone (University of Stavanger); Onozaka, Yuko (University of Stavanger) |
| Abstract: | This study examines gender differences in leadership behavior and effectiveness using a framed field experiment conducted in a large company. Leaders and followers in randomly assigned teams interacted in recorded online team meetings to discuss topics of strategic importance. Their behaviors were assessed through research assistant ratings and natural language processing, and effectiveness via external evaluations and follower surveys. We find that female leaders exhibited significantly more communal behaviors through elaboration on team members' ideas, frequent discussion contributions, and affirmative language than male leaders. However, these differences did not translate into superior team performance; male and female leaders showed com- parable effectiveness, particularly in external evaluations. Follower evaluations were more responsive to leader gender, with evidence of a communality bonus whereby male leaders received disproportionately positive evaluations for communal behaviors. Higher-level leaders achieved better team performance, regardless of gender. These findings suggest that leadership effectiveness is more strongly associated with developed expertise than with gender per se. Organizations may thus benefit from broadly developing leadership capabilities, alongside implementing evaluation systems that mitigate gender biases. |
| Keywords: | leadership; behavior; gender; RC |
| JEL: | C93 J16 J24 J28 |
| Date: | 2025–06–06 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:stavef:2025_001 |
| By: | Nava Ashraf; Oriana Bandiera; Virginia Minni; Luigi Zingales |
| Abstract: | We evaluate a firm's unusual, worker-centered, solution to the agency problem: enabling employees to reduce the cost of effort rather than pushing them with performance rewards. We randomize the roll-out of the firm's "Discover Your Purpose" intervention among 2, 976 white-collar employees and evaluate their outcomes over two years. We find that performance increases because the low performers either leave the firm or improve in their current jobs. The trade-off between meaning and pay flattens as those with low meaning and high pay leave the firm. Treatment also reshapes stated priorities and reduces gender gaps in preferences and behaviors, including uptake of parental leave. A cost-benefit analysis reveals high returns that are shared between the firm and the employees through higher bonuses. Finally, we show that observational data obscure these gains, causing firms to underestimate the intervention's true value. |
| Keywords: | incentives, worker motivation, worker performance, meaning-making |
| Date: | 2025–05–14 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2104 |
| By: | Katharina Hartinger (Johannes-Gutenberg University, Germany); Erik Sarrazin (Johannes-Gutenberg University, Germany); David J. Streich (Catholic University Eichstätt-Ingolstadt) |
| Abstract: | Digitalization in banking is leaving elderly clients at risk of losing access to financial services, but little is known about technology adoption at an advanced age. We develop and evaluate training interventions to foster internet banking adoption in a field experiment with more than 25, 000 elderly clients of a large German savings bank, of whom we randomize 333 into training. Our administrative banking panel data allows us to account for selection on observables and assess the sustainability of treatment effects. After the interventions, the share of clients who use internet banking increases by 26 percentage points in the treatment group relative to a matched control group. In terms of sustainable usage, the share of online transactions increases by 13 percentage points and remains elevated four months later. An extensive placebo analysis suggests that as much as 85% of the effect can be causally attributed to the training interventions. We find that training boosts non-technical adoption skills and reduces key adoption barriers. Treatment effects are larger for women and those not in charge of household finances. We further estimate intent-to-treat effects and predict dropout along the entire multi-stage adoption process to shed light on practical considerations when rolling out large-scale technology adoption interventions in this age group. Specifically, we show that the type of training (self-guided versus social learning) impacts dropout differentially despite similar treatment effects overall, with the social learning treatment being more inclusive. |
| Keywords: | technology adoption, internet banking, financial inclusion, digitalization, non-cognitive skills |
| JEL: | O33 G21 I21 J24 D12 D91 C93 |
| Date: | 2025–06–17 |
| URL: | https://d.repec.org/n?u=RePEc:jgu:wpaper:2505 |
| By: | Rafael Dix-Carneiro; Pinelopi Koujianou Goldberg; Costas Meghir; Gabriel Ulyssea; Pinelopi Goldberg |
| Abstract: | We examine the effects of international trade in the presence of a set of domestic distortions giving rise to informality, a prevalent phenomenon in developing countries. In our quantitative model, the informal sector arises from burdensome taxes and regulations that are imperfectly enforced by the government. In equilibrium, smaller, less productive firms face fewer distortions than larger, more productive ones, potentially leading to substantial misallocation. We show that in settings with a large informal sector, the gains from trade are significantly amplified, as reductions in trade barriers imply a reallocation of resources from initially less distorted to more distorted firms. We confirm findings from earlier reduced-form studies that the informal sector mitigates the impact of negative labor demand shocks on unemployment. Nonetheless, the informal sector can exacerbate the adverse real income effects of economic downturns, amplifying misallocation. Last, our research sheds light on the relationship between trade openness and cross-firm wage inequality. |
| Keywords: | trade liberalization, misallocation, distortions, informality |
| JEL: | F14 F16 J46 O17 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11873 |
| By: | Yotaro Ueno (Graduate School of Economics, Kyoto University and Junior Research Fellow, Research Institute for Economics & Business Administration (RIEB), Kobe University, JAPAN) |
| Abstract: | Poverty traps arise when households remain poor due to insufficient capital assets. While traditional mechanisms emphasize occupational choices, re-analysis of Balboni, Bandiera, Burgess, Ghatak and Heil (2022b) suggests that long-run divergence in household capital may be more closely linked to wives' empowerment. To explore this, I develop a dynamic collective household model incorporating intra-household bargaining, where decisions on capital investment and labor allocation are influenced by husbands' conservative social preferences. This framework demonstrates the existence of interpretable multiple steady states that differ in household capital accumulation and wives' labor supply, even in the absence of market frictions. Empirical data validate a distinctive feature of the model: increases in household capital are proportionally linked to increases in women's labor supply. These findings suggest that women's empowerment can effectively complement "big push" policies aimed at poverty reduction. |
| Keywords: | Poverty traps; Intra-household bargaining |
| JEL: | O12 D10 J22 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:kob:dpaper:dp2025-17 |