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on Labor Markets - Supply, Demand, and Wages |
| By: | Fuchs, Johann; Gersbach, Hans; Schmassmann, Samuel |
| JEL: | J24 J31 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc25:325411 |
| By: | Jakob Beuschlein; Jósef Sigurdsson; Horng Chern Wong |
| Abstract: | We study the effects of corporate acquisitions on workers using Swedish administrative data and document substantial, persistent earnings losses following acquisitions. These losses reflect both displacement and wage cuts among stayers from target firms. We find no evidence that increased monopsony power accounts for these wage cuts. Instead, they are concentrated in acquisitions where the acquiring-firm CEO sat on the board of the target prior to the transaction. Such acquisitions increase acquiring-firm profits and CEO pay, without affecting total employment or revenue, consistent with rent redistribution. Overall, acquisitions reduce wages and disrupt employment, with profit gains partly extracted from workers. |
| Keywords: | mergers and acquisitions, wages, layoffs, monopsony, firm performance, managers |
| JEL: | G34 J23 J31 J42 J63 L25 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12162 |
| By: | Tino, Stephen |
| Abstract: | This paper examines the importance of labor market power and firm productivity for understanding the immigrant-native pay gap. Using matched employer-employee data from Canada, I estimate a wage-posting model that incorporates two-sided heterogeneity and strategic interactions in wage setting. In the model, firms mark down wages below the marginal revenue product of labor (MRPL), and the equilibrium immigrantnative pay gap arises from differences in wage markdowns and MRPL. The findings suggest that immigrants earn 77% of their MRPL on average, compared to 84% for natives. I also decompose the immigrant-native pay gap using counterfactual exercises that account for general equilibrium responses of workers and firms. The results of the counterfactuals suggest that (i) differences in labor supply curves contribute significantly to earnings inequality between immigrants and natives; (ii) immigrants tend to work at more productive firms, driven by their tendency to work in cities where firms are more productive on average; and (iii) heterogeneity in firm productivity magnifies the contribution of labor supply differences to the immigrant-native pay gap, highlighting the importance of interaction effects. |
| Keywords: | Immigration, inequality, monopsony, firm productivity, immigrant-native earnings differential |
| JEL: | J01 J15 J23 J31 J42 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:clefwp:327118 |
| By: | Sturm, Miriam; Biewen, Martin; Fitzenberger, Bernd; Erhardt, Pascal |
| JEL: | J20 J21 J31 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc25:325424 |
| By: | Ufuk Akcigit; Harun Alp; Jeremy Pearce; Marta Prato |
| Abstract: | This paper studies how individuals sort into entrepreneurship and invention-related occupations and how their interactions shape innovation and economic growth. We develop an endogenous growth model in which occupational sorting jointly determines the supply of R&D talent and entrepreneurs’ demand for it. Empirically, using Danish microdata, we show that transformative entrepreneurs—those who hire R&D workers—tend to have higher IQ and education and build faster-growing firms than other entrepreneurs. Quantitatively, the estimated model indicates that financial barriers to education misallocate talent; alleviating them through education subsidies increases both demand and supply of R&D workers, raising innovation and long-run growth. Broad startup subsidies are ineffective. |
| Keywords: | entrepreneurship; R&D Policy; innovation; IQ; endogenous growth |
| JEL: | O31 O38 O47 J24 |
| Date: | 2025–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednsr:101780 |
| By: | Pfeil, Katharina; Kasper, Matthias; Necker, Sarah; Feld, Lars P. |
| Abstract: | We study how individuals adjust their labor supply in response to tax reforms that alter income tax progressivity. In an online experiment with 522 participants, we compare responses to reforms that replace a progressive tax system with a flat tax and vice versa. We find asymmetric effects: labor supply increases when a progressive regime is replaced by a flat tax system, but does not decline when progressivity is introduced. This increase in labor provision occurs only when the reform lowers the marginal tax rate, not when it raises it. Our results suggest that labor supply responses to tax reforms are nuanced and path-dependent: reforms change behavior when they ease tax burdens for individuals who were previously discouraged from working more due to progressive thresholds. |
| Keywords: | Tax System Design, Tax Reform, Notches, Labor Supply, Online Experiment |
| JEL: | J20 J22 H24 H30 C91 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:aluord:327115 |
| By: | Bechlioulis, Alexandros P.; Chletsos, Michael; Christou, Tryfonas; Karadimitropoulou, Aikaterini E. |
| Abstract: | This paper examines whether minimum wage reforms affect income inequality among low-wage workers. We construct a novel “within-occupation” measure of wage dispersion, using a Greek dataset between 2010 and 2020. Using modern difference-in-differences analysis for causal inference, our findings show non-symmetrical effects on wage dispersion when a minimum wage reform is imposed. In particular, the minimum wage cut of 2012 did not alter the wage dispersion of low-wage workers, while the minimum wage increase of 2019 led to a decrease in wage inequality at the bottom segment of the labor market. Our paper equips policymakers with a solid understanding of the effects of minimum wage reforms on wage inequality and highlights the important role of wage rigidities in shaping these effects. |
| Keywords: | income inequality; wage inequality; minimum wage reform; modern difference-in-difference analysis; quantile regression |
| JEL: | C31 J08 J31 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129622 |
| By: | Natee Amornsiripanitch; Paul Gompers; George Hu; Will Levinson; Vladimir Mukharlyamov; Sachin Srivastava |
| Abstract: | This paper proposes a non-pecuniary measure of career achievement, seniority. Based on a database of over 150 million resumes, this metric exploits the variation in how long it takes workers to attain job titles. A person’s seniority is defined as the number of years it takes the median individual—within the same industry and firm size category—to achieve that person’s job title. Seniority aligns with standard markers of success—it is positively correlated with both wages and educational attainment. To demonstrate its value as a measure of career progression, we show that individuals with higher seniority levels in the public sector are more likely to transition to higher-paying positions in the private sector. When non-monetary factors influence career choice, evaluating labor market outcomes using non-wage measures, such as seniority, offers significant advantages. |
| JEL: | J0 J01 J3 J30 J32 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34292 |
| By: | Jorge Velilla (IEDIS, University of Zaragoza); José Alberto Molina (IEDIS, Universidad de Zaragoza); Pierre-André Chiappori (Columbia University) |
| Abstract: | Household dissolution is a key concern in family economics, with implications for individual welfare, child outcomes, income trajectories, or wealth, which ultimately impact inequality and vulnerability. This paper examines how wage dynamics relate to the stability of dual-earner households, using a collective model with limited com- mitment, where spouses commit to future behavior subject to individual rationality constraints, allowing for renegotiation of intrahousehold arrangements or household dissolution. We use data from the PSID over 1999-2019, and estimate how spouses’ wage changes relate to divorce, accounting for observed behaviors, demographics, and unobserved heterogeneity. The results show that large negative wage changes signifi- cantly increase the likelihood of divorce, while positive changes have no effect, as the model predicts. This pattern is consistent with asymmetric intrahousehold insurance, highlighting the role of economic risk and bargaining asymmetries in shaping family dynamics, and informs policies targeting household vulnerability to income shocks. |
| Keywords: | collective model; commitment; divorce; wages; PSID data |
| JEL: | D12 D13 J12 J31 |
| Date: | 2025–09–23 |
| URL: | https://d.repec.org/n?u=RePEc:boc:bocoec:1096 |
| By: | Leila Gautham; Clemens Hetschko; Peter Howley |
| Abstract: | We demonstrate that higher income enhances the enjoyment individuals derive from leisure. This effect cannot be explained by diminishing marginal utility of leisure time or systematic differences in leisure activities across income groups. Instead, we show that this is largely attributable to cognitive stress – low income constrains the mental bandwidth necessary to enjoy leisure. These findings challenge the view that more leisure time offsets income inequalities. While higher-income individuals have less leisure time available, the leisure they do engage in provides them with greater utility. These findings also have important implications for how we model labour supply. Wage increases may not just increase the marginal cost of leisure, but also enhance the utility it provides. Finally, our research speaks to debates on the role that money plays in happiness. Our findings suggest that the utility-enhancing effect of income is largely due to the role income plays in buying ‘restful’ leisure. |
| Keywords: | leisure, consumption, inequality, emotional wellbeing |
| JEL: | D63 I3 J22 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12169 |
| By: | Federico Fabio Frattini (Fondazione Eni Enrico Mattei); Francesco Vona (University of Milan and Fondazione Eni Enrico Mattei); Filippo Bontadini (Luiss University and SPRU - University of Sussex); Italo Colantone (Bocconi University, GREEN Research Center, Baffi Research Centre, CESifo and Fondazione Eni Enrico Mattei) |
| Abstract: | What are the job multipliers of the green industrialization? We tackle this question within EU regions over the period 2003-2017, building a novel measure of green manufacturing penetration that combines green production and regional employment data. We estimate local job multipliers of green penetration in a long-difference model, using a shift-share instrument that exploits plausibly exogenous changes in non-EU green innovation. We find that a 3-years change in green penetration per worker increases the employment-to-active population ratio by 0.11 pp. The effect is: persistent both in manufacturing and outside manufacturing; halved by agglomeration effects that increase the labour market tightness; stronger for workers with high and low-education; and present also in regions specialized in polluting industries. When focusing on large shocks in a staggered DiD design, we find ten times larger effects, particularly in earlier periods. |
| Keywords: | Green industrialisation, Local job multipliers, Employment effects of the green transition, Shift-share IV design, Difference-in-differences |
| JEL: | J21 O14 R11 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:fem:femwpa:2025.13 |
| By: | Christopher L. Foote; Shigeru Fujita; Amanda M. Michaud; Joshua Montes |
| Abstract: | We suggest a core set of indicators for evaluating the position of the labor market relative to maximum employment. The unemployment rate remains the key indicator of the cyclical position of the labor market, as it is time-tested, is highly correlated with other indicators, and has practical measurement advantages. But other indicators can provide complementary evidence to get a fuller picture of the labor market. A joint analysis of job vacancies and unemployment in a Beveridge curve diagram is helpful when structural shocks affect the labor market and when the labor market is very tight, while the employment-to-population ratio is useful late in expansions, when increases in employment tend to arise from higher labor force participation. Additional indicators—including wage growth and worker flows—can complement the core indicators we discuss. We draw on lessons from the Global Financial Crisis and the COVID-19 pandemic to evaluate the effectiveness of various indicators. |
| Keywords: | maximum employment; unemployment; job vacancies; labor force participation; wages; business cycle |
| JEL: | E24 E32 J23 |
| Date: | 2025–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedbwp:101801 |
| By: | Hagen M. Krämer (Karlsruhe University of Applied Sciences) |
| Abstract: | Kurt W. Rothschild, an Austrian economist known for his multiparadigmatic and inter¬discipli-nary approach, made significant contributions to Keynesian and post†Keynesian economic theory. Born in 1914 in Vienna, his work encompassed price theory, labor market economics, growth and distribution, power and ethics in economics, and economic policy. His incisive critique of neoclassical theories, advocacy for state intervention, and commitment to methodological pluralism distinguish his work as a vital contribution to economic thought. Since income distribution is a central theme in Rothschild’s research, this paper examines his contributions to post†Keynesian distribution theory. Following a brief overview of his life, academic formation, and the historical context that shaped his thinking, the paper explores his theoretical innovations, emphasizing his rejection of mono†causal explanations in favor of an approach that integrates economic, political, and social dynamics. Rothschild’s perspective on income distribution as a product of complex interactions between markets, institutions, power structures, and ongoing conflict is a defining feature of his work. The paper concludes by assessing the continued relevance of his insights for contemporary economic research. His legacy remains a guiding framework for scholars seeking a more holistic and dynamic understanding of income distribution and its policy implications. |
| Keywords: | Kurt Rothschild, Multiparadigmatic Approach, Post†Keynesian Theory, Bargaining Power, Labor Market Economics, Distribution Theory |
| JEL: | E24 D31 J31 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:imk:fmmpap:118-2025 |
| By: | Daelen, Anna L. M. |
| Abstract: | This paper provides evidence of costly perseverance in the field. In a setting where consultants select and pursue projects autonomously, I show that perseverance is related with fewer successfully completed projects as well as lower sales and commissions. Using rich firm data on individual job activity, I shed light on the task-specific behavioral mechanisms. Overall, perseverant consultants start fewer projects. In fast markets, the lower number of projects started is the main channel of costly perseverance; in slower markets, costs primarily arise from pursuing projects in a more isolated and uninformed way, as shown by an inefficient allocation of effort between stakeholders. The survey questions driving costly perseverance point to the consultants’ failure to incorporate negative signals and opportunity costs into their effort allocation. Using heterogeneity within and between consultants’ task assignment, I show that perseverance is more costly in exploration tasks as opposed to well-defined tasks characterized by mere exploitation. |
| Keywords: | grit, job performance, productivity, tenacity, motivation |
| JEL: | M51 J24 J63 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc25:325451.2 |
| By: | Gazze, Ludovica (University of Warwick); Gupta, Tanu; Huang, Allen (Weiyi); Londoño, Valentina; Saavedra, Santiago; Toma, Mattie (University of Warwick) |
| Abstract: | There is limited evidence on the non-health impacts of air pollution, including productivity in the workplace and behavior. We examine the effect of air pollution on participation, collaboration, and feedback provision in a workplace setting. Our experiment randomly assigns air purifiers to rooms at three large academic conferences to investigate the causal impact of air pollution on participants’ engagement behavior. We construct a participant engagement index based on 12 presentation-level behavioral outcomes directly measured by conference observers through an online form and weigh each behavioral outcome using weights elicited from an expert survey. Conference rooms treated with air purifiers exhibit 48% less PM2.5 concentration compared to control rooms. However, we do not find a statistically significant change in engagement. Communication in the workplace might not be a large driver of the empirical relationship between air quality and productivity, albeit more research is needed across workplaces and measures of communication. |
| Keywords: | Indoor air quality ; Engagement ; Workplace ; Field Experiment JEL Codes: Q53 ; J24 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1579 |
| By: | Orazio Attanasio (Yale University, FAIR @NHH, NBER); Ricardo Paes de Barros (Insper); Pedro Carneiro (University College London, IFS, CEMMAP); David K. Evans (Center for Global Development); Lycia Lima (São Paulo School of Economics, Fundação Getulio Vargas); Pedro Olinto (World Bank); Norbert Schady (World Bank) |
| Abstract: | This study examines the impact of publicly provided daycare for children aged 0-3 on outcomes of children and their caregivers over the course of seven years after initial daycare enrollment. At the end of 2007, the city of Rio de Janeiro in Brazil used a lottery to assign children to limited public daycare openings. Winning the lottery translated to a 32 percent increase in total time in daycare during a child’s first four years of life. This allowed caregivers more time to work, resulting in higher incomes for beneficiary households in the first year of daycare attendance and 4 years later (but not after 7 years, by which time all children were eligible for universal schooling). The rise in labor force participation is driven primarily by grandparents and by adolescent siblings residing in the same household as (and possibly caring for) the child, and not by parents, most of whom were already working. Beneficiary children saw sustained gains in height-for-age and weight-for-age, which are likely to have resulted from the better nutrition they received in the center rather than the increase in resources at home. They also saw shorter-term gains in cognitive development, which in contrast to the impacts on nutrition, likely resulted from the short-term gains in home resources. |
| Keywords: | early child development, childcare, Brazil |
| JEL: | I21 I28 J22 O15 |
| Date: | 2025–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:cgd:wpaper:728 |
| By: | Deepak Saraswat; Shwetlena Sabarwal; Lindsey Lacey; Natasha Jha; Nishith Prakash; Rachel Cohen |
| Abstract: | Nearly 200 million children under five in low- and middle-income countries face developmental deficits, even as access to early childhood services expands. We present evidence from a large-scale randomized controlled trial (N=3, 131 children in 201 schools) in Nepal’s government system testing three models of combining classroom quality with parental engagement. All teachers completed a 15-day training on pedagogy, national standards, and caregiver engagement, after which schools were randomly assigned to models varying whether caregiver sessions were led by teachers alone, by teachers supported with in-class helpers, or by external facilitators. The intervention increased children’s developmental outcomes by 0.10–0.20 standard deviations and improved caregiver engagement by similar magnitudes. Effects were most consistent when teachers received support that sustained classroom quality while engaging families, underscoring the critical role of workload management. Impacts were concentrated among disadvantaged households—those with lower baseline engagement, higher stress, and less education—highlighting the potential to reduce early childhood inequalities. Mechanism analysis shows the program shifted home and school inputs from substitutes to complements, creating mutually reinforcing pathways for child development. These findings demonstrate that modest, system-embedded reforms can generate scalable improvements in early childhood human capital formation. |
| Keywords: | early childhood development, cognitive skills, non-cognitive skills, Ages and Stages Questionnaire (ASQ), Nepal |
| JEL: | J13 J24 I21 I24 O15 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12160 |
| By: | Henrique S. Basso (BANCO DE ESPAÑA AND CEMFI); Omar Rachedi (ESADE, UNIVERSITAT RAMON LLULL) |
| Abstract: | Leveraging variation in robot adoption across U.S. metropolitan areas, we document that automation reduces the sensitivity of inflation to unemployment. To rationalize this finding, we build a New Keynesian model with search frictions in the labor market where robot adoption flattens the Phillips curve. The key channel is the option value of automation: the threat of automating labor tasks alters workers’ effective bargaining power, muting the wage sensitivity to unemployment. We validate the relevance of this channel in the data by showing that robot adoption reduces the sensitivity of inflation to unemployment relatively more in highly unionized metropolitan areas. |
| Keywords: | E24, E31, J31, O33 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2536 |