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on Labor Markets - Supply, Demand, and Wages |
| By: | Francisco J. Cabrera-Hernández; Andrew Dustan; Daniel Osuna Gomez; María Padilla-Romo |
| Abstract: | We estimate the long-run effects of marginal admission to elite public high schools on students' labor supply in the context of Mexico City's centralized high school admission system. Using a regression discontinuity approach, we compare students whose placement exam scores are just above and just below the elite admission threshold. We find that five and ten years after the admission exam, marginally admitted students are less likely to be employed in the formal private sector, and, if employed, they earn lower wages. However, these employment and wage gaps close after 15 years. Moreover, we find that marginal admission to elite high schools leads to delayed entry into the formal labor market, and, at least in the short run, students in elite high schools seem to sort into lower-productivity firms and industries. |
| JEL: | I25 I26 J24 O17 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34706 |
| By: | Jiatong Zhong (University of Alberta) |
| Abstract: | This paper explores learning-by-doing in the context of creative tasks using detailed data on fiction writers from a digital publishing platform. I construct measures to quantify authors’ performance over time and document significant variation in both starting levels and rates of improvement. Learning manifests as an improvement in quality instead of the speed of production. Writers improve slowly at the beginning, but quality improvement can last for several years, much longer than typically observed in manufacturing settings. |
| Keywords: | learning by doing; learning curves; creative tasks |
| JEL: | D83 J24 J46 L82 |
| Date: | 2026–01–20 |
| URL: | https://d.repec.org/n?u=RePEc:ris:albaec:022118 |
| By: | Peter Spencer |
| Abstract: | This paper constructs new measures of effective labour input in the UK economy. Unlike previous studies, which focus on the aggregate effect of labour quality on output, it analyses the contributions of factors such as human capital and industrial structure separately. Using data from the ONS and HMRC, numbers of employees and hours worked are weighted by labour costs, used as an indicator of their marginal productivity. The results underline the importance of investment in training and education. They also show that the reallocation of employment towards lower-productivity industries has reduced labour productivity, while regional migration has increased it. This approach provides a useful framework for analyzing structural change in the labour market and for monitoring the effect of government policy. |
| Keywords: | Divisia index; Törnqvist index; labour quality; productivity measurement; labour composition; sectoral reallocation; United Kingdom; growth accounting; effective labour input. |
| JEL: | E24 J24 O47 C43 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:yor:yorken:26/02 |
| By: | Iñaki Aldasoro; Leonardo Gambacorta; Rozalia Pal; Debora Revoltella; Christoph Weiss; Marcin Wolski |
| Abstract: | This paper provides new evidence on how the adoption of artificial intelligence (AI) affects productivity and employment in Europe. Using matched EIBIS-ORBIS data on more than 12, 000 non-financial firms in the European Union (EU) and United States (US), we instrument the adoption of AI by EU firms by assigning the adoption rates of US peers to isolate exogenous technological exposure. Our results show that AI adoption increases the level of labor productivity by 4%. Productivity gains are due to capital deepening, as we find no adverse effects on firm-level employment. This suggests that AI increases worker output rather than replacing labor in the short run, though longer-term effects remain uncertain. However, productivity benefits of AI adoption are unevenly distributed and concentrate in medium and large firms. Moreover, AI-adopting firms are more innovative and their workers earn higher wages. Our analysis also highlights the critical role of complementary investments in software and data or workforce training to fully unlock the productivity gains of AI adoption. |
| Keywords: | artificial intelligence, firm productivity, Europe, digital transformation |
| JEL: | D22 J24 L25 O33 O47 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1325 |
| By: | Egshiglen Batbayar (University of Bonn); Christoph Breunig (University of Bonn); Peter Haan (DIW Berlin , FU Berlin); Boryana Ilieva (DIW Berlin, European Central Bank) |
| Abstract: | We propose a new approach to estimate selection-corrected quantiles of the gender wage gap. Our method employs instrumental variables that explain variation in the latent variable but, conditional on the latent process, do not directly affect selection. We provide semiparametric identification of the quantile parameters without imposing parametric restrictions on the selection probability, derive the asymptotic distribution of the proposed estimator based on constrained selection probability weighting, and demonstrate how the approach applies to the Roy model of labor supply. Using German administrative data, we analyze the distribution of the gender gap in full-time earnings. We find pronounced positive selection among women at the lower end, especially those with less education, which widens the gender gap in this segment, and strong positive selection among highly educated men at the top, which narrows the gender wage gap at upper quantiles. |
| Keywords: | quantile regression; sample selection; roy model; rank invariance; semiparametric inference; gender wage gap; wage inequality; |
| JEL: | C14 C31 C36 J16 J21 J31 |
| Date: | 2026–01–09 |
| URL: | https://d.repec.org/n?u=RePEc:rco:dpaper:560 |
| By: | Gert Bijnens (National Bank of Belgium, Research Department); Sam Desiere (Ghent University, Belgium); Rigas Oikonomou (IRES/LIDAM, UCLouvain, Belgium); Tiziano Toniolo (IRES/LIDAM, Uclouvain, Belgium); Bruno Van der Linden (IRES/LIDAM, UCLouvain, Belgium and IZA, CESifo, Germany) |
| Abstract: | Belgium’s 2016 payroll tax exemption for first-time employers triggered a sharp increase in firms hiring their first worker but little growth among larger firms. To account for this pattern, we develop and estimate a directed search model—with discrete hiring, firm heterogeneity, and endogenous entry— using Belgian microdata. The exemption reduces the high marginal cost of the first hire, enabling many previously non-hiring entrepreneurs to become employers, but most lack the productivity needed to expand beyond one worker. The model matches the post-reform size distribution and identifies the conditions under which size-dependent hiring subsidies can foster sustained firm growth. |
| Keywords: | payroll taxes; size-dependent policies; hiring frictions; wage subsidies; competitive search theory. |
| JEL: | H25 J08 J23 J38 L25 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbb:reswpp:202601-487 |
| By: | Cavallo, Mariagrazia; Dhuey, Elizabeth; Fumarco, Luca; Halewyck, Levi; ter Meulen, Simon |
| Abstract: | This article reviews the growing literature on age at school entry (ASE) and its effects across the life course. ASE affects a wide range of outcomes, including education, labor-market performance, health, social relationships, and family formation. We synthesize the evidence using a conceptual framework that distinguishes four empirically intertwined ASE components: starting age, age at outcome, relative age, and time in school. While ASE effects are often substantial and persistent, many studies estimate bundled impacts without isolating specific components. A central lesson from the literature is that most estimated effects reflect bundled timing and institutional mechanisms rather than isolated maturity advantages, with interpretation depending on outcome construction and empirical design. We conclude by highlighting key gaps, particularly around relative age and long-run outcomes, and directions for future research. |
| Keywords: | age at school entry, starting age, age at outcome, relative age, time in school, institutional mechanisms, quasi-experimental methods |
| JEL: | I12 I21 I24 I31 J12 J13 J24 K42 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1707 |
| By: | Yueran Ma; Mengdi Zhang; Kaspar Zimmermann |
| Abstract: | We collect new data to document the long-run evolution of the firm size distribution in ten market-based economies in Asia, Europe, North America, and Oceania, where we can obtain comprehensive coverage of the population of firms. Around the world, we observe prevalent increases in the concentration of sales, net income, and equity capital over the past century. These trends hold in the aggregate and at the industry level. Meanwhile, employment concentration has been stable over the long run in most cases. The evidence shows that the rising dominance of large firms is a pervasive phenomenon, not limited to the recent decades or the United States, and that large firms often achieve greater scale without proportionally more workers. |
| JEL: | E01 L1 N1 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34711 |
| By: | Dohmen, Thomas (University of Bonn and Maastricht University); Golsteyn, Bart (Maastricht University); Grönqvist, Hans (Research Institute of Industrial Economics (IFN)); Hertegård, Edvin (SOFI, Stockholm University); Pfann, Gerard (Maastricht University and University of Amsterdam) |
| Abstract: | This study examines how parenting styles predict children’s lifetime outcomes. Using a Swedish dataset which combines rich survey information on parenting styles with administrative records tracking children over five decades, we find that authoritarian parenting is negatively associated with children’s long-term success, especially regarding their educational attainment. The results for other parenting styles are more mixed. Authoritarian parenting remains a robust predictor of adverse outcomes even when accounting for ability and family background. We identify children’s knowledge accumulation and parental educational expectations as key mechanisms explaining these results. |
| Keywords: | Child Rearing; Human Capital; Skill Formation |
| JEL: | I24 J13 J24 R20 |
| Date: | 2026–01–21 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:iuiwop:1551 |
| By: | Antonio Cabrales; Esther Hauk |
| Abstract: | Many workers value purpose and meaning in their jobs alongside income, and firms need to align these preferences with profit goals. This paper develops a dynamic model in which firms invest in purpose to enhance job meaning and motivate effort. Workers, who differ in productivity, choose both productive and socialization effort, gaining utility from income and meaning. Purpose accumulates over time through firm investment and interacts with socialization to generate meaning, which boosts productivity. Firms invest in purpose only insofar as it raises profits. We characterize the unique equilibrium, including steady state and transition dynamics. Meaning and purpose rise with the importance workers place on meaning and with firm's patience, but fall with depreciation and socialization costs. The relationship with workers' share of output is nonmonotonic. We also show that some intermediate level of heterogeneity in skills is best for performance. Compared to a worker-owned firm, profit-maximizing firms underinvest in purpose, highlighting a misalignment between firm incentives and worker preferences. The model provides insight into when and why firms adopt purpose-driven practices and underscores the role of diversity in fostering meaning at work. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.05005 |
| By: | Fabian Stephany; Ole Teutloff; Angelo Leone |
| Abstract: | The growing adoption of artificial intelligence (AI) technologies has heightened interest in the labour market value of AI-related skills, yet causal evidence on their role in hiring decisions remains scarce. This study examines whether AI skills serve as a positive hiring signal and whether they can offset conventional disadvantages such as older age or lower formal education. We conduct an experimental survey with 1, 700 recruiters from the United Kingdom and the United States. Using a paired conjoint design, recruiters evaluated hypothetical candidates represented by synthetically designed resumes. Across three occupations - graphic designer, office assistant, and software engineer - AI skills significantly increase interview invitation probabilities by approximately 8 to 15 percentage points. AI skills also partially or fully offset disadvantages related to age and lower education, with effects strongest for office assistants, where formal AI certification plays an additional compensatory role. Effects are weaker for graphic designers, consistent with more skeptical recruiter attitudes toward AI in creative work. Finally, recruiters' own background and AI usage significantly moderate these effects. Overall, the findings demonstrate that AI skills function as a powerful hiring signal and can mitigate traditional labour market disadvantages, with implications for workers' skill acquisition strategies and firms' recruitment practices. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.13286 |
| By: | Leonardo Bursztyn; Ewan Rawcliffe; Hans-Joachim Voth |
| Abstract: | We study the ability of a firm to elicit repeated effort from workers by creating a “rat race” of hierarchical status-based incentives. We examine performance using data on over 5, 000 German air force pilots during World War II. Pilots’ effort is hard to monitor; motivation is key to success. Fighter pilot performance increases markedly as they approach eligibility for a medal before falling off upon receipt of the award. The same effort path repeats itself as the pilot nears the next higher-prestige medal. Status-conscious pilots also exert more effort when new medals are introduced. We show that medals serve as substitutes for other forms of status. Medal cachet declines over time as lower-ability pilots receive them, making the introduction of new medals desirable. These results suggest that a tiered, expanding system of status-based incentives can repeatedly leverage worker status concerns to extract effort. |
| JEL: | D22 D91 M52 N44 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34707 |
| By: | Orrenius, Johan (Research Institute of Industrial Economics (IFN)) |
| Abstract: | I study the digital market for attention in a freemium mobile game where users choose between paying with money or by watching 30-second video ads. Using unique event-level data, I estimate consumers’ supply elasticity of attention. In the aggregate, a one percent higher price increases the share of users watching videos as a payment by 2.2 percent. A substantial part is due to individual heterogeneity in tastes. When accounting for individual heterogeneity, the elasticity reduces to 0.5. The individual elasticities vary throughout the day, peaking in the evening. Complementing the unique data on each play made by users, I use data on the revenue to the gaming company from showing ads. The data is on an individual and daily level, allowing me to match the individual supply elasticity with the revenue from showing ads to the same individual. I find advertisers pay more to show ads to individuals who are less likely to use ads as their payment method. The effect is stronger among Android users than iOS users. |
| Keywords: | Attention; Mobile games; Value of time |
| JEL: | D12 D83 J22 L82 |
| Date: | 2026–01–12 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:iuiwop:1550 |
| By: | Tsuyoshi Nihonsugi (Department of Economics, Osaka University of Economics); Yoshio Kamijo (Faculty of Political Science and Economics, Waseda University); Satoshi Taguchi (Graduate School of Commerce, Doshisha University); Shigeharu Okajima (Graduate School of International Cooperation Studies, Kobe University); Hiroko Okajima (Graduate School of Economics, Nagoya University) |
| Abstract: | This study examines how gender quotas influence job application decisions and occupational choices in Japan, and how these effects vary across individual characteristics. Using a choice-based conjoint experiment with 1, 167 participants, we analyze preferences for positions with and without gender quotas across different job types. We find that gender quotas significantly increase women's application likelihood by approximately 10 percentage points, with the strongest effects among high-performing employed women, while not discouraging applications from comparably qualified men. Beyond increasing female representation, quotas enable women to make occupational choices that better align with their preferences and are associated with higher expected productivity and workplace well-being. Further analysis reveals that support for gender quotas relates systematically to personality traits, gender role beliefs, and prior experiences—notably, men who recognize past gender advantages show greater support for quotas. These findings provide actionable insights for designing inclusive recruitment strategies and diversity policies in non-Western contexts, demonstrating that well-designed quotas can promote both equity and efficiency in labor markets. |
| Keywords: | gender quotas, affirmative action, gender gap, hiring discrimination, occupational segregation, labor market |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:wap:wpaper:2529 |
| By: | Livia Alfonsi; Michal Bauer; Julie Chytilová; Edward Miguel |
| Abstract: | This paper investigates whether economic hardship undermines preferences for honesty. We use controlled, high-stake measures of cheating for private benefit in a large sample of 5, 664 Kenyans, exploiting three complementary sources of variation: experimentally manipulated monetary incentives to cheat, a randomized increase in the salience of one’s own financial situation, and the Covid‐19 income shock (exploiting randomized survey timing, with respondents interviewed before vs. during the crisis). We find that cheating behavior is highly responsive to financial incentives in the experiment. Covid-19 economic hardship—marked by a 51% drop in monthly earnings—leads to a sharp increase in the prevalence of cheating, and the effect increases gradually with prolonged hardship. The effects are largest among the most economically impacted and are amplified when the salience of one’s own financial situation is experimentally increased. The results demonstrate that while most individuals exhibit a strong preference against cheating under normal conditions (in line with the existing body of work), economic forces can account for a substantial share of variation in dishonesty: the estimated cheating rate rises from 29% under low stakes in normal times to 86% under high stakes during the crisis. |
| JEL: | C93 D91 O12 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34695 |
| By: | Hangyu Chen; Yongming Sun; Yiming Yuan |
| Abstract: | We investigate the impact of artificial intelligence (AI) adoption on skill requirements using 14 million online job vacancies from Chinese listed firms (2018-2022). Employing a novel Extreme Multi-Label Classification (XMLC) algorithm trained via contrastive learning and LLM-driven data augmentation, we map vacancy requirements to the ESCO framework. By benchmarking occupation-skill relationships against 2018 O*NET-ESCO mappings, we document a robust causal relationship between AI adoption and the expansion of skill portfolios. Our analysis identifies two distinct mechanisms. First, AI reduces information asymmetry in the labor market, enabling firms to specify current occupation-specific requirements with greater precision. Second, AI empowers firms to anticipate evolving labor market dynamics. We find that AI adoption significantly increases the demand for "forward-looking" skills--those absent from 2018 standards but subsequently codified in 2022 updates. This suggests that AI allows firms to lead, rather than follow, the formal evolution of occupational standards. Our findings highlight AI's dual role as both a stabilizer of current recruitment information and a catalyst for proactive adaptation to future skill shifts. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.03558 |
| By: | Ryuichiro Hirano (Bank of Japan); Yutaro Takano (Bank of Japan); Kosuke Takatomi (Bank of Japan) |
| Abstract: | This paper estimates Japan's trend inflation and its determinants using a trend-cycle BVAR decomposition. The estimation results indicate that trend inflation in Japan remained subdued as the public had gradually lowered their medium- to long-term inflation expectations following the collapse of the asset price bubble in the early 1990s. The analysis further reveals that subdued real income growth, relative to the labor productivity and labor supply growth, also exerted downward pressure on trend inflation during the period from the 2000s to the early 2010s, when trend inflation was particularly restrained. These findings suggest that monitoring medium- to long-term inflation expectations and trends in structural factors of the economy is important for assessing its long-run inflation trend. |
| Keywords: | Trend Inflation; Trend-Cycle BVAR Decomposition |
| JEL: | C22 E24 E31 E52 E58 |
| Date: | 2026–01–30 |
| URL: | https://d.repec.org/n?u=RePEc:boj:bojwps:wp26e01 |
| By: | Silvia Matalone; Michele Belloni; Ludovico Carrino; Elena Meschi |
| Abstract: | This paper estimates the causal effect of job quality on the physical and mental health of older European workers. We combine longitudinal data from the Survey of Health, Ageing and Retirement in Europe (SHARE) with occupation- and country-level job-quality measures from the European Working Conditions Survey (EWCS) for 14 European countries. To address endogenous occupational sorting, we focus on workers who remain within the same 3-digit ISCO occupation across waves, and estimate individual fixed-effects models that exploit exogenous within-occupation changes in working conditions over time. We find that deteriorations in job quality significantly worsen health outcomes. In particular, higher work intensity, poorer working time quality, and weaker job prospects reduce mental health and selected physical health outcomes. Pronounced gender heterogeneity emerges: women’s mental health is more sensitive to changes in work intensity and working time quality, while men’s health is more consistently affected by job discretion, including cardiovascular risk. Institutional context further moderates these effects, with smaller health penalties in countries with stronger healthcare capacity, stricter employment protection, and more comprehensive occupational health and safety regulation. Overall, the findings highlight the role of labour market conditions as causal determinants of health and the importance of integrated policy responses in ageing societies. |
| Keywords: | Working conditions, physical and mental health, healthcare systems and institutions |
| JEL: | I1 J01 J28 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:mib:wpaper:567 |
| By: | Li, Shurui (Department of Economics, Umeå University) |
| Abstract: | This paper examines how fertility events contribute to the gender pay gap in a framework that integrates a life-cycle model with a search and matching model featuring endogenous job matching and wage bargaining. The model represents four fertility-related life-cycle stages, each of which is associated with distinct labor market behaviors and constraints. This paper highlights the role of first-birth timing, parental leave, and job amenity preferences in shaping gender gaps in human capital accumulation and career trajectories. Counterfactual simulations show that delaying the first birth and shortening parental leave substantially improve women’s trajectories of wages and promotions. Equalizing amenity preferences between genders, though not efficiency-enhancing, significantly raises women’s representation in high-paying jobs and promotes greater structural equality in the labor market. The framework provides a structural lens to assess how demographic shocks interact with search frictions and amenity preferences to produce enduring gender gaps in the labor market. |
| Keywords: | parental leave; gender gap; job amenity; human capital; search and matching |
| JEL: | D91 J13 J16 J24 J64 |
| Date: | 2026–01–19 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:umnees:1042 |
| By: | Fernando Rios-Avila; Ajit Zacharias; Thomas Masterson; Aashima Sinha |
| Abstract: | In this paper, we present the empirical methodology used to estimate the Levy Institute Measure of Time and Income Poverty (LIMTIP) for the United States over the period 2007-2022. We provide a step-by-step account of the statistical matching procedure employed to construct a synthetic dataset by combining the American Time Use Survey (ATUS) for year t with the Annual Social and Economic Supplement (ASEC) for year t + 1. We describe in detail how records were matched using a combination of principal component analysis, propensity score, and clustering methods. We then assess the quality of the match, focusing on the 2022 data. Specifically, we examine the alignment of the ATUS weekday and weekend samples with the synthetic dataset across key demographic characteristics and summarize the performance of the matching algorithm. Finally, we compare the marginal distributions of time use between the original ATUS data and the synthetic dataset. Our findings indicate that the statistical matching procedure produced a high-quality match, rendering the synthetic dataset suitable for time poverty analysis. Although not discussed in detail here, we also evaluated match quality for each year from 2007 to 2021. |
| Keywords: | Time Poverty; Income Poverty; Statistical Matching; LIMTIP |
| JEL: | C14 C40 D12 D31 I32 J22 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1104 |
| By: | Eldar Dadon (BGU); Marie Claire Villeval (Université Lumière Lyon 2, Université Jean- Monnet Saint-Etienne, emlyon business school, GATE, 69007, Lyon, France); Ro’i Zultan (BGU) |
| Keywords: | CSR, signaling, labor market, experiment |
| JEL: | C91 D83 J33 M5 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:bgu:wpaper:2515 |
| By: | David G. Blanchflower; Alex Bryson |
| Abstract: | The worsening mental health of young workers in the United States drives the disappearance of the U-shape in wellbeing and the hump-shape in illbeing in the last decade. Illbeing declines in age among workers but is hump-shaped among non-workers across all US states. This has been the case for some time and is apparent in our analyses of two large US datasets with long time runs - the Behavioral Risk Survey System 1993-2025 and the National Health Interview Survey of 1997-2024. Although the mental health of workers and non-workers has been declining it has been deteriorating most quickly among young workers, leading to a steepening in the age gradient of mental illbeing for workers. Improvements in worker wellbeing (and declines in worker illbeing) with age are mirrored in age differences in reported working conditions in the American Job Quality Survey of 2025: six measures of job quality rise with age. Declines in mental health are most pronounced among the youngest workers ages 18-22 who are likely drawn from lower socio-economic classes and report the greatest difficulties making ends meet. |
| JEL: | I31 J28 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34696 |
| By: | Agrawal, David R.; Chen, Xinyu |
| Abstract: | The taxing authority of subnational governments is limited by the geographic location of individuals and economic activity. The rise of telework decouples a worker's residence from the employer's location, creating challenges for personal income taxes, corporate income taxes, and unemployment insurance. Using Census data, we show that teleworkers are more likely than non-teleworkers to move interstate and realize larger reductions in their state tax burdens from a move. Motivated by this evidence, we evaluate alternative principles for sourcing labor income to the state of residence, the employer, or work and discuss how remote work reshapes subnational tax bases. |
| Keywords: | telework, work-from-home, income tax, sales tax, property tax, sourcing rules, migration |
| JEL: | H24 H25 H71 J21 J68 R51 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1708 |