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on Labor Markets - Supply, Demand, and Wages |
| By: | Schack, Trine (Department of Economics and Business Economics, Aarhus University); Meekes, Jordy (Leiden University); Barreto, César (OECD, Paris); Carcillo, Stéphane (Sciences Po, Paris); Fluchtmann, Jonas (OECD); Hijzen, Alexander (OECD); Lochner, Benjamin (FAU Erlangen-Nuremberg); Nibloe, Matthew (UCL); Vejlin, Rune (Aarhus University) |
| Abstract: | We study the incidence, sources, and dynamics of low-wage employment using harmonised linked employer-employee administrative data from Denmark, France, Germany, the Netherlands, Portugal, and the United Kingdom. We examine how worker characteristics, firm-specific wage premia, wage progression, and labour market institutions shape outcomes at different parts of the lower wage distribution. Three main findings emerge. First, worker characteristics account for most of the wage gap facing low-wage workers, though firm-specific wage premia matter too, especially at the very bottom. Firm premia reflect both sorting across industries and pay differences across firms within industries. Second, low-wage employment is at least partly transitory, as workers at the bottom see faster subsequent wage growth and change firms more often. Third, minimum wages and marginal effective tax rates show limited systematic association with wage growth or job-to-job mobility, though higher minimum wages are linked to a smaller share of workers below 70 % of the median. These patterns are broadly similar across countries and point to the joint importance of worker skills and access to higher-paying firms for improving low-wage workers' prospects. |
| Keywords: | low-wage employment, cross-country, matched employer-employee data, wage premia, taxes |
| JEL: | J24 J31 J38 J62 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18891 |
| By: | Bhattacharya, Leena; Kulshreshtha, Shobhit; van Soest, Arthur |
| Abstract: | Climate change pose significant risks to workers. Although workers in the formal sector can often mitigate heat exposure through climate-controlled workplaces, the same is not true for workers employed in informal and heat-exposed occupations. As a result, the economic costs of rising temperatures are likely to affect these workers disproportionately. This concern is particularly relevant in low- and middle-income countries such as India, where nearly three-quarters of workers are employed in informal jobs. This study examines the impact of high temperature on the labor supply and productivity of daily-wage workers using the 2023-24 Periodic Labor Force Survey (PLFS) of India, which provides a seven-day panel of worker's labor outcomes. We find that when weekly maximum temperatures exceed 35.C relative to 20-25.C, weekly earnings decline by approximately 5%, despite no significant reduction in total hours worked. Furthermore, exploiting the panel structure of data, we find that hours worked decline by approximately 13 minutes per day under extreme heat. In addition, daily earnings fall by 4%, and the probability of working declines by 0.3 percentage points. We do not observe similar effects among salaried or self-employed workers. Our findings highlight the unequal burden of climate change on workers in informal sector and highlight the need for targeted heat adaptation policies to safeguard incomes and worker productivity in a warming climate. |
| Keywords: | Climate change, labor productivity, daily earnings, hours worked, India |
| JEL: | J21 J24 J31 Q54 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1807 |
| By: | Joshua S. Gans |
| Abstract: | Can automation harm workers without replacing them? We study jobs in which workers value both producing useful output and knowing that the output depends on their own contribution. A credible machine alternative can weaken that second source of meaning even when the firm retains the worker. Our model shows that this loss raises compensation when wages adjust fully; when they adjust only partly, workers bear some of the loss themselves. It can also make automation more likely. An external developer may profit by publicly demonstrating a machine before licensing it, because the demonstration lowers the value of the human alternative. This "meaning externality" can create demand for the machine and make profitable development socially harmful. Better technical quality and greater public salience have different effects: quality improves output, while salience alone weakens human work. Automation can, therefore, reduce the value of work before it eliminates jobs. |
| JEL: | D62 D91 J24 J31 J32 O33 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35559 |
| By: | Hızıroğlu Aygün, Aysun (Istanbul Technical University); Kirdar, Murat (Koc University); Koyuncu, Murat (Boğaziçi University); Stoeffler, Quentin (Bordeaux School of Economics) |
| Abstract: | A central concern with humanitarian assistance is that unconditional cash transfers might discourage work. Yet refugees differ from the chronically poor in most cash-transfer studies: many retain skills that transfers might help reactivate. We study the world's largest humanitarian cash transfer scheme, the Emergency Social Safety Net (ESSN) in Turkey, which long hosted more refugees than any other country. Using a survey representative of the refugee population, we exploit the program's dependency-ratio eligibility rule in a regression discontinuity design. Far from discouraging work, cash transfers increase the probability that any man in the household works by 13.2 and the share of working men by 19.3 percentage points. We find no evidence of an effect on women's already-low labor supply. A design-based local-randomization analysis with exact finite-sample inference corroborates these effects (9.8 and 17.4 percentage points). Transfers also improve access to information, reduce reliance on harmful food-coping strategies, and raise Turkish-language course enrollment and education spending. These patterns suggest transfers relax the liquidity and information constraints refugees face rather than inducing a shift toward leisure. |
| Keywords: | humanitarian assistance, forced displacement, unconditional cash transfers, social protection, work disincentives, regression discontinuity design, Turkey |
| JEL: | I38 J21 J22 J61 O15 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18879 |
| By: | Martins, Pedro (Nova School of Business and Economics); Silva, Pedro (Universitat Autonoma de Barcelona); Temudo, Madalena (Nova School of Business and Economics); Pinho, Ana (Centre for Research in Higher Education Policies) |
| Abstract: | Vocational education and training (VET) may accelerate entry into the labour market while reducing participation in further education. We quantify this trade-off in the context of a school-based vocational system. We draw on administrative data linked to a post-secondary survey for five cohorts in Portugal. We exploit the institutional structure of the educational system to address self-selection. Identification leverages leave-out variation in the share of lower-secondary classmates who subsequently choose VET. We find a pronounced trade-off in early post-school transitions for students whose track choices respond to those of their peer choices: vocational enrolment increases employment by 26-34 percentage points and improves several job quality indicators; on the other hand, VET reduces further education participation by 30-40 percentage points. VET is also associated with higher NEET incidence, an effect that appears to reflect earlier exposure to unemployment rather than inactivity during the school-to-work transition. Additional analyses suggest important heterogeneity across VET school types and fields of specialisation, with smoother transitions in (publicly funded) private VET schools, and engineering-related fields. |
| Keywords: | school-based vocational education, peer choices, school-to-work transition, NEET, job quality |
| JEL: | I21 I26 J24 C26 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18884 |
| By: | Tania Babina; Alex X. He; Renhao Jiang |
| Abstract: | Using a new firm-level measure of AI investment based on AI-skilled employment—spanning machine learning through generative and agentic AI—we show that AI investments are associated with productivity growth in recent years, but not over the previous decade. We trace the productivity gains to the accumulation of organization capital that AI helps create: durable firm-specific knowledge acquired through learning-by-doing that enables more efficient production. We build a novel measure of organization capital based on workers’ job descriptions and document that productivity gains are driven by AI-skilled jobs that build organization capital. Overall, our findings suggest that AI investment generates productivity growth by creating organization capital. |
| JEL: | D22 D24 D25 E22 G3 G30 G32 J24 O33 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35684 |
| By: | Pattaraphon Kenny Wongchamcharoen; Kris Gulati; Min Min Fong; Abhishek Nagaraj |
| Abstract: | Most LLM benchmarks rank models on their ability to automate work tasks. In practice, however, models are often used to assist other (human or LLM) agents. The question that drives model selection is therefore not only which model produces the best output, but which model most improves the work of another (weaker) agent. We introduce a unified framework that evaluates the capability of models to automate and augment another agent's performance. Across seven economically grounded real-world tasks, an assistant model writes assistance text for a standardized lower-capacity worker model, which produces the deliverable. In automation mode, the assistant produces the output directly. Outputs are scored through blind pairwise comparisons by an LLM judge panel with task-specific rubrics, replicated across ten runs. Rankings across the two regimes are only modestly correlated, and the automation winner loses augmentation on five of seven tasks. Assistance is not reliably positive. The unaided worker outranks every assisted condition on three tasks, and only one model's guidance beats no guidance on average. These results suggest that automation ability is an incomplete proxy for assistance quality, motivating benchmarks that evaluate models according to the roles they play in human-AI and multi-agent systems. |
| JEL: | J24 M15 O33 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35663 |
| By: | Tirza J. Angerhofer; Allan Collard-Wexler; Matthew C. Weinberg |
| Abstract: | Employers facing limited labor market competition may suppress wages below socially optimal levels. Unions can counteract wage suppression through collective bargaining, though they may also push wages above the socially optimal level and lead to job rationing. We estimate a structural model of labor supply, labor demand, and Nash-in-Nash bargaining over wages between local teacher unions and school districts in Pennsylvania’s K-12 public school system from 2013 to 2019. We compare negotiated equilibrium wages and employment to oligopsony wage posting and social planner scenarios. On average, oligopsony reduces wages 7 percent below the social optimum, while collective bargaining raises wages 8 percent above it. Averages mask substantial district-level heterogeneity driven by bargaining power variation. Twenty-eight percent of school districts have salaries lower when public schools are unionized than when they are not due to cross-district externalities, where high salaries at one school cause hiring reductions that increase labor supply elsewhere. |
| JEL: | J31 J42 J45 J51 L13 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35476 |
| By: | Merja Kauhanen; Aart-Jan Riekhoff; Susanna Sten-Gahmberg |
| Abstract: | Using linked survey and register data, we provide new nationally representative evidence on platform work in Finland, examining its prevalence, heterogeneity, and combination with multiple jobholding. Platform work participation is most strongly associated with immigrant background. Onsite and online platform workers exhibit systematically different profiles — immigrant background and urban residence are distinctive predictors of onsite platform work while lower income is independently associated with online participation. We also provide the first nationally representative evidence on the intersection of platform work and multiple jobholding in a Nordic coordinated market economy. Conventional multiple jobholding concentrates among higher-income and higher-educated workers consistent with portfolio theory, while platform work without strictly defined multiple jobholding follows a necessity pattern more prevalent among lower-income workers. Platform multiple jobholding conforms to neither framework, exhibiting income invariance and a distinctive gender gap absent from conventional multiple jobholding. |
| Keywords: | platform work, multiple jobholding, onsite platform work, online platform work |
| JEL: | J22 J24 |
| Date: | 2026–06–30 |
| URL: | https://d.repec.org/n?u=RePEc:pst:wpaper:361 |
| By: | Alexander Bick; Adam Blandin; David J. Deming; Tyler R. Schumacher |
| Abstract: | We measure how workers use genAI for their jobs in a nationally representative survey linking genAI adoption to detailed occupations and tasks. Our data provide the first task-level genAI adoption indexes, which we show can inform analyses of genAI’s labor market impact. Exposure scores explain some, but far from all, of the variation in adoption across occupations and tasks. We also distinguish our indexes from measures based on genAI platform chat logs, which differ conceptually and tend to over-classify chats into generic activities spanning many occupations. Finally, we highlight that current adoption is widespread but shallow: genAI is used across many occupations and tasks, yet within most of them, fewer than half of workers adopt. This indicates substantial variation among workers doing very similar work, suggesting that understanding who adopts may matter as much as understanding which tasks genAI assists. |
| JEL: | J24 O3 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35677 |
| By: | Claudio Schilter; Thea S. Zoellner |
| Abstract: | Many firms in tight labor markets recruit for highly gender-segregated occupations, leaving them, in effect, drawing from only half the potential labor pool. We study how firms can use fringe benefits to attract workers and influence occupational choice. Unlike occupation-specific recruiting strategies, fringe benefits can be added to any occupation; they are also easily tailored, implemented, and scaled. Using a personalized and incentivized discrete choice experiment, we present participants with job options that match their skills and work task preferences. Within each option, we vary salary, occupation, and fringe benefits that adolescents had classified as gender-neutral, male-typed, or female-typed. We find that fringe benefits are highly valued: their effect is around a third as large as having prior interest in the occupation. Neutral and stereotypical benefits in particular improve perceptions of the firm across multiple dimensions. Furthermore, we find substantial gender differences. Female-typed benefits deter male participants, whereas all other benefit-participant combinations have a positive effect. Female participants value benefits more when those benefits are paired with an atypical occupation, and we find suggestive evidence that this reflects benefits alleviating concerns about limited support in such roles. In addition, male-typed benefits can increase the attractiveness of gender-atypical occupations for female participants. Female participants who consider atypical occupations place relatively higher value on these benefits and tend to exhibit less traditionally feminine preferences. We also find suggestive evidence that anticipated social reactions, particularly from parents, accompany these choices. |
| Keywords: | occupational choice, fringe benefits, gender |
| JEL: | J20 J24 J28 J16 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iso:educat:0259 |
| By: | Ozaki, Daisuke; Arato, Hiroki |
| Abstract: | This paper quantifies women's occupational choice frictions between manufacturing and services in Japan from the early 2000s to the late 2010s using a general equilibrium Roy model. We then decompose changes in women's sectoral employment propensities relative to men's into comparative-advantage and friction components. In the full sample (ages 20–59), the model-implied occupational distortion moves closer to the frictionless benchmark, whereas in the young subsample (ages 20–34), it shifts from manufacturing-biased to service-biased by the late 2010s. Over the same period, women's comparative disadvantage in manufacturing narrows, especially in the young subsample. Within the model, changes in comparative advantage and occupational choice frictions largely offset each other, so women's sectoral employment propensities relative to men's change only modestly. Counterfactual simulations show that output losses from occupational choice frictions evolve differently across the two samples: they decline sharply in the full sample but increase in the young subsample. Specifically, the output loss falls from about 18% to about 4% in the full sample, whereas it rises from about 6% to about 10% in the young subsample. |
| Keywords: | misallocation, occupational propensity, occupational choice frictions, comparative advantage, gender, Roy model |
| JEL: | E24 J16 J22 J24 |
| Date: | 2026–08–08 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:130396 |
| By: | Andreas Irmen (DEM, Université du Luxembourg); Yuanhua Xu (DEM, Université du Luxembourg); |
| Abstract: | "A sustained decline in hours worked per worker reduces pension benefits in a pay-as-you-go (PAYG) pension system while simultaneously weakening productivity growth through learning. We study these effects in an overlappinggenerations model with endogenous labor supply, where two-period-lived individuals have preferences proposed by Boppart and Krusell (2020). Production is subject to a learning externality: supplying more hours raises a worker’s productivity and generates knowledge spillovers to co-workers. The implied Marshallian labor supply is hump-shaped. Despite these nonlinearities, the model admits closed-form transitional dynamics and a unique, stable steady state. Along the balanced growth path, pension benefits grow more slowly than wages because higher wages induce workers to supply fewer hours. The resulting slowdown in learning further dampens both wage and pension growth. Ignoring the endogenous labor supply response substantially overestimates both pension growth and the rate of return of the PAYG system. Due to the learning externality and social discounting, the planner’s and the equilibrium allocations differ. A PAYG pension system financed by a proportional contribution rate applied to individual labor earnings cannot implement the planner’s allocation. By contrast, a PAYG system with lump-sum contributions and benefits combined with a wage subsidy for workers, can." |
| Keywords: | "Endogenous Labor Supply, Pay-As-You-Go Pensions, Learning, Endogenous Growth, Overlapping Generations." |
| JEL: | D15 H55 J22 O33 O41 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:luc:wpaper:26-12 |
| By: | Kónya, István; Krekó, Judit |
| Abstract: | This paper examines how foreign direct investment affects the labor share through productivity differences between foreign- and domestically owned firms. We develop a search-and-matching model in which more productive foreign firms acquire domestic firms. Foreign ownership raises productivity and wages, but incomplete pass-through of the productivity advantage to workers reduces the labor share. Using European industry-level data, we find that greater foreign employment penetration is associated with lower labor shares and that the foreign productivity premium substantially exceeds the foreign wage premium. Hungarian administrative firm data show the same pattern: foreign-owned firms have higher productivity and labor costs but lower labor shares. Event-study estimates around foreign acquisitions are less precise but are consistent with this mechanism at longer horizons. Our results show how economies with a large foreign-owned sector can combine relatively high wages with relatively low labor shares and highlight persistent foreign–domestic productivity differences as a potential explanation for labor-share differences across Europe. |
| Keywords: | foreign direct investment; foreign ownership; labor share; labor productivity |
| JEL: | E25 F21 F23 J31 J42 |
| Date: | 2026–08–28 |
| URL: | https://d.repec.org/n?u=RePEc:cvh:coecwp:2026/04 |
| By: | André Luduvice; Roberto Pinheiro |
| Abstract: | We model artificial intelligence (AI) as a distinct capital input in a nested CES aggregate production function that extends work done by Krusell et al. (2000) and embed it in a dynamic general equilibrium economy. By bringing the model to the data, we estimate the degree to which AI either substitutes for or complements the other production inputs at the aggregate level. We find that AI is complementary to the high-skill–equipment composite and that the AI weight in production remains small. We then use the model to study how this complementarity shapes the macroeconomic and distributional effects of AI capital accumulation. The estimated model implies different effects of alternative AI shocks. A rise in the AI usage share is contractionary as it increases reliance on a scarce complementary input. A fall in AI prices is expansionary due to the lower cost of accumulating AI capital. A tax on AI capital income raises limited revenue while the AI capital stock remains small, but can finance welfare-improving transfers as the AI price falls. A large-scale universal basic income (UBI) funded jointly by a consumption tax slows AI investment with welfare gains for low-skill workers at the expense of losses for high-skill workers and entrepreneurs. On the measurement side, we construct a quality-adjusted AI price index from hedonic regressions and build a corresponding AI capital stock. |
| JEL: | E22 E25 J24 J31 |
| Date: | 2026–09–04 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedcwq:103765 |
| By: | Jingjing Chen; Jianlei Han; Shing-Yi Wang; Yongxiang Wang |
| Abstract: | This paper examines reforms in China’s imperial examination system during the Northern Song dynasty that anonymized exam submissions and ended local officials’ discretion to recommend candidates. Using prefecture-level data from 960–1127 and a difference-in-differences design, we compare areas with and without prominent elite families, where corruption and elite capture were more likely. The reforms increased the share of successful candidates from commoner backgrounds and narrowed their performance gaps with elites in scholarship and political achievement, indicating better selection of commoner talent. Treated prefectures also saw less social unrest. Overall, the reforms strengthened meritocracy, broadened political access, and promoted stability. |
| JEL: | D73 J45 N45 O15 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35531 |
| By: | Banerjee, Souvik (IIT Bombay); Jaiswal, Preeti (IIT Bombay); Mukhopadhyay, Sankar (University of Nevada, Reno) |
| Abstract: | Using nationally representative data from the Annual Survey of Industries, we examine the effects of India’s Maternity Benefit (Amendment) Act, 2017, which extends the paid maternity leave from 12 weeks to 26 weeks on firms’ hiring decisions and gender-specific employment outcomes. We use the institutional variation of the policy mandate, which applies only to firms with 10 or more employees, to define treatment and control firms. Our results reveal that firms respond to the mandate primarily through labour substitution, i.e., replacing female workers with male workers rather than bearing the increased cost of female employment. We find a decline of 8.4% in female workers and 9.5% in female mandays worked, accompanied by an increase of 2.6% in male workers and 2.1% in male mandays. This substitution is concentrated in industries with high female employment shares, while firms in low female-share industries show no female employment effects but exhibit positive spillovers to male wages. Firm output and profit are unaffected, indicating that male workers serve as effective production substitutes. These findings imply well-intentioned maternity leave policies can inadvertently reinforce gender labour market disparities. |
| Keywords: | maternity benefit, female labour, employment |
| JEL: | J13 J33 J31 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18888 |
| By: | Devos, Louise (Ghent University); Lippens, Louis (Ghent University); Baert, Stijn (Ghent University) |
| Abstract: | Religious discrimination in hiring is rarely studied independently from ethnic discrimination. We fill this gap using a preregistered factorial survey experiment in which professional recruiters evaluate candidate profiles that independently vary by ethnic majority versus minority names, visual religious signals, and volunteering activities signalling either Christian or Muslim religious affiliation. Beyond hiring intentions, we measure recruiters’, colleagues’, and customers’ anticipated willingness to work with candidates, as well as recruiters’ HEXACO personality assessments of the candidates. Candidates whose religious position recruiters identify receive lower interview ratings than candidates whose position remains unclear to them, and this penalty does not differ between Christian, Muslim, and atheist attributions; interview propensity declines further as attributed religiosity rises; and among the assigned signals, only religious volunteering reduces hiring chances. Religious candidates are not regarded as less diligent or less honest, but as less likely to be accepted by others. |
| Keywords: | religion, hiring, discrimination, factorial survey experiment |
| JEL: | C83 J61 J71 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18906 |
| By: | Ferreira, João R.; Martins, Pedro S. |
| Abstract: | We evaluate the impact of vocational education and training (VET) in a setting with high dropout rates and socio-economic inequality in educational attainment. We estimate that the introduction of VET courses across public upper secondary schools in Portugal was associated with a 2.7 percentage points increase in on-time graduation rates (6% of the baseline rate). Our identification strategy exploits the staggered introduction of the VET track, which created quasi-experimental variation in the local availability of VET across school districts and cohorts. Drawing on a comprehensive student-school matched panel spanning 2006-2017, we implement an event-study design and three complementary IV strategies. We find substantial positive effects of VET take-up on graduation rates, especially among previously low-achieving and socio-economically disadvantaged students. |
| Keywords: | Vocational education, Educational attainment, Educational inequality, Matched studentschool data, Portugal |
| JEL: | I21 I24 I28 J24 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1810 |
| By: | Pawel Chrostek; Lucas van der Velde (Group for Research in Applied Economics (GRAPE); Warsaw School Economics); Tomasz Zawisza; Piotr Żoch (Group for Research in Applied Economics (GRAPE); Wydział Nauk Ekonomicznych Uniwersytet Warszawski) |
| Abstract: | This paper analyzes earnings dynamics and inequality in Poland from 2000 to 2020 using administrative tax data as part of the Global Repository of Income Dynamics (GRID). Income grew substantially, but inequality was no higher in 2020 than in 2000, having risen through 2006 and fallen thereafter. Earnings changes exhibit pronounced deviations from normality: cyclical skewness, persistent excess kurtosis, and a hockey-stick-shaped dispersion profile across permanent income, steepest at the bottom, flat in the middle, and rising again at the top. We relate percentile-level changes in earnings and earnings growth to the minimum wage, unemployment, and GDP. Minimum-wage growth is strongly associated with gains at the bottom of the cross-sectional distribution and higher unemployment with downward shifts throughout both distributions, while associations with GDP are less stable across specifications. Poland's macroeconomic conditions are related to the location and lower tail of the cross-sectional distribution and to the cyclical asymmetry of earnings changes, while the level of individual earnings risk resembles that of mature European economies. |
| Keywords: | earnings dynamics, income inequality, earnings risk, administrative data, Poland |
| JEL: | D31 E24 E32 J31 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:fme:wpaper:120 |
| By: | Canaan, Serena (Simon Fraser University); Fischer, Stefanie (Monash University); Mouganie, Pierre (Simon Fraser University); Schnorr, Geoffrey (U.S. Military Academy at West Point) |
| Abstract: | Institutional rules that appear neutral can produce unequal outcomes when applied to students who differ in how they respond to them. We study this in the context of academic probation, a policy used by nearly every U.S. college to warn students whose grades fall below a fixed threshold that continued enrollment is conditional on improvement. To do so, we draw on student records from a large California public university, linked to state administrative earnings data. We identify the causal effects of probation using a regression discontinuity design comparing students who narrowly scored above the cutoff to those who just missed it. We find that probation raises dropout, lowers degree completion, and reduces earnings at ages 24 to 31 among low-income students, while high-income students are largely unaffected. We then contrast the standard policy with an alternative, at the same institution, which incorporates a coaching program. We find that the alternative policy eliminates these effects and improves academic performance. Taken together, these results suggest that the design of institutional policies is critical for closing socioeconomic gaps in degree completion. |
| Keywords: | academic probation, higher education, socioeconomic disparities, regression discontinuity, coaching program |
| JEL: | I23 I24 I28 J24 C21 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18896 |
| By: | Deutscher, Nathan (Australian National University); Siminski, Peter (University of Technology Sydney) |
| Abstract: | We contribute to understanding the causal mechanisms of intergenerational welfare persistence. We study veterans’ pensions, leveraging Australia’s Vietnam-era draft lotteries for identification and over three decades of administrative data with universal coverage. Deployed service increased veterans’ expected welfare receipt by 7.5 years (100.5%) and reduced employment (3.2 years; 30.2%). Effects for veterans’ spouses were qualitatively similar and approximately half as large. How did this affect their children? Despite high statistical power, we find almost no lasting effects on child outcomes, including welfare, employment, income, education, partnering and fertility. Direct estimates of causal intergenerational welfare elasticities are precise zeros, highlighting that welfare receipthttps://legacy.iza.org/en/webcontent/personnel/photos/personal_menu does not always spill over to the next generation. |
| Keywords: | intergenerational mobility, welfare dependency, veterans’ benefits, disability pensions, conscription, labour supply |
| JEL: | H53 H55 H56 I38 J22 J62 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18876 |
| By: | Peter Haan (DIW Berlin, FU Berlin, Berlin School of Economics); Julia Schmieder (Otto von Guericke University Magdeburg, RFBerlin); Izabela Wnuk-Soares (RFBerlin, DIW Berlin) |
| Abstract: | We study how immigration affects prices through changes in labor supply. Using policy-driven increases in immigration to Germany and administrative data covering the universe of nursing homes, we find that one additional foreign-born woman per 100 residents reduces nursing-home care prices by 2.6 percent. The price effects are concentrated in more competitive markets. Examining potential mechanisms, we find that immigration lowers labor costs as nursing homes shift toward lower-paid foreign-born workers. We find no evidence of declines in inspection-based measures of quality or of scale effects. Finally, immigration increases the use of informal care, potentially strengthening competitive pressure from the broader care market. |
| Keywords: | immigration; labor supply; prices; nursing homes; |
| JEL: | J61 F22 J30 |
| Date: | 2026–09–09 |
| URL: | https://d.repec.org/n?u=RePEc:rco:dpaper:585 |
| By: | Trevor Fitzgerald; Atul Gupta; Stephen D. Schwab |
| Abstract: | Physicians in the U.S. military health care system are quasi-randomly assigned to combat deployments, leading to gaps of varying durations in their clinical practice. We leverage this unique setting to provide novel causal evidence on skill depreciation (forgetting) and learning-by-doing among physicians. We find robust evidence that readmission rates increase by 48% in the first two months after a surgeon returns from a deployment. However, surgeons return to baseline performance within 6 months of resuming practice. In contrast, obstetricians maintain elevated cesarean section rates for up to 9 months, implying a deeper change in clinical judgment. Finally, we interpret these patterns through the lens of a learning model and estimate learning-by-doing rates for surgeons and obstetricians. A doubling of recent procedure volume reduces readmission and C-section rates by 17% and 11% for surgeons and obstetricians, respectively. |
| JEL: | I10 J24 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35502 |
| By: | Esslinger, Anna |
| Abstract: | This study investigates how the connection of taxation to public benefits can decrease tax payers' perceived tax burden, affecting their labor-leisure decision. We present a model of tax and benefit (mis)-perception, in which payoff maximizing work effort increases when the perceived tax burden de- creases. Increasing the salience of benefits funded by taxation and the prob- ability of receiving them decreases this perceived tax burden. We use two real-effort online experiments to test the suppositions of the model. In a flat tax system, we find that lack of information on the accrual of benefits increases perceived tax burden and decreases labor supply. In a progressive tax system, we find that full benefit salience improves motivation to re- main in the unemployment insurance system and that effort increases under benefit salience when the unemployment rate is high. As such, behavioral responses to the salience of benefits also requires the expectation of their need. |
| Keywords: | Work Motivation, Online Experiment, Tax and Benefit Salience, Unemployment Insurance |
| JEL: | D91 H24 J22 J31 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:aluord:343050 |
| By: | Cesar Chavez Padilla; Shuaizhang Feng; James J. Heckman; Zhe Yang |
| Abstract: | Using rich data on Chinese schoolchildren, we study the relationships of IQ and personality traits with children’s risk preferences and how they affect the precision with which those preferences are measured. Our structural model separates preferences from deliberation noise and guessing, and relates guessing to deliberation noise. Psychological measures have weak direct influences on preferences but strongly affect deliberation noise and guessing behavior. Shocks to choice have persistent individual-specific components and are not independent. Socioeconomic background has little direct influence on preferences or deliberation noise once traits are accounted for. Background variables affect psychological traits, however. Risk preferences differ across and within genders. For small gambles, girls are less risk averse than boys, but the opposite holds for larger gambles. |
| JEL: | D12 D90 I21 J24 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35526 |
| By: | Jimena S. Ferraro (Universidad de San Andrés); Raul A. Sosa (Universidad de San Andrés); Franco M. Vazquez (Universidad de San Andrés) |
| Abstract: | Cesarean rates differ sharply between private and public hospitals in Buenos Aires, even though payments do not vary with delivery mode in either sector. We argue this gap reflects organizational design rather than procedure prices. In the Buenos Aires metropolitan area, individualized private and team-based public maternity care coexist within the same labor market. Using ex ante preferences and medical records for low-risk first-time mothers, we document a preference margin and a timing margin. Stated preferences for cesarean predict scheduled procedures strongly in private hospitals and not at all in public ones. Elective cesareans in private hospitals cluster on boundary working days (the Monday or Friday adjacent to a weekend or holiday), and the intrapartum cesarean rate is about 13 percentage points higher on working than nonworking days in private hospitals, but indistinguishable from zero in public ones, a gradient that reflects selection induced by the timing margin. A simple model rationalizes both margins through the opportunity cost of physician time, internalized only when physicians are residual claimants of their own schedule. Organizational design, not procedure prices, is the primary lever behind the discretionary component of cesarean use. |
| Keywords: | cesarean section, physici anagency, organizational design, birth timing, maternity care, mixed health systems. |
| JEL: | I11 I18 L23 J22 J44 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:sad:wpaper:184 |
| By: | Hyeran Chung; Haena Lee; Sita Slavov |
| Abstract: | Health shocks are a major driver of retirement. However, the existing literature on this topic tends not to consider the marital context in which retirements occur. Using the 1992-2022 Health and Retirement Study and staggered difference-in-differences methods, we investigate how spousal health shocks impact retirement transitions. We also investigate whether these effects differ by gender and health insurance status. We consider multiple definitions of health shocks, including self-reported health declines, additional diagnoses, hospitalizations, increases in out-of-pocket medical spending, and functional deterioration. Our results suggest that the probability of retirement increases by 1.2 to 1.3 percentage points (12 to 13 percent) after a spouse’s new health condition diagnosis or hospitalization. These retirements tend to occur earlier than anticipated. They also tend to be concentrated among women and respondents with employment-based health plans that include retiree coverage for their spouse. |
| JEL: | D13 D15 I10 J14 J26 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35477 |
| By: | Buser, Thomas (University of Amsterdam); Cappelen, Alexander (NHH Norwegian School of Economics); Gneezy, Uri (Rady School of Management, UCSD); Tungodden, Bertil (NHH Norwegian School of Economics) |
| Abstract: | We provide globally representative evidence on two attitudes toward competition: individuals’ willingness to compete and the importance they attach to boys and girls being willing to compete, using a novel survey module that we fielded as part of the 2022 Gallup World Poll. The data cover more than 66, 000 individuals across 62 countries. Men are more willing to compete than women in all but two countries, and willingness to compete is higher among younger, more educated, and higher-income individuals. Attitudes toward children’s willingness to compete vary substantially across countries, with competitiveness valued more for boys in some countries and for girls in others. Both attitudes are systematically related to the economic and social environment. Individuals exposed to greater inequality or faster population growth during their formative years are more willing to compete and place greater importance on children being willing to compete. Greater exposure to gender equality during formative years is associated with smaller gender gaps in both adults’ willingness to compete and attitudes toward the competitiveness of boys and girls. |
| Keywords: | willingness to compete, gender, global, representative sample, socialization |
| JEL: | D91 J16 J24 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18901 |
| By: | David Card; Ana Rute Cardoso; Pedro Luis Silva |
| Abstract: | In the depths of the 2010 financial crisis the Portuguese government enacted a series of reforms in its prescription drug reimbursement system. Over the next three years value added per pharmacist in retail pharmacies fell by a third, reflecting a rise in generic substitution and reductions in the markups allowed for prescription drugs. This massive shock led to pay cuts for incumbent pharmacists and the introduction of a two-tier pay system for new hires, with little or no reduction in the growth of employment. We use detailed longitudinal records from the Quadros de Pessoal data base, merged with information on collective bargaining settlements and firm financial records, to study the impacts of the reforms. We estimate that between 2009 and 2022 average wages of pharmacists fell by a third; most of this reduction was due to lower wages for newly entering cohorts. The implied responsiveness of wages to productivity is substantially above most estimates in the rent-sharing literature, arguably reflecting the strong attachment of workers to the sector and the steady inflow of newly graduating pharmacists. Stepping back, we then consider how wages of pharmacists have diverged relative to wages of other health care professionals in Portugal, and the decisions of recent college applicants to enter the profession. |
| JEL: | J3 J5 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35553 |
| By: | Titan Alon; Matthias Doepke; Jane Olmstead-Rumsey; James Symons-Hicks; Michèle Tertilt |
| Abstract: | We study the transmission of macroeconomic shocks in a model of the household sec tor featuring single and married households, joint labor-supply decisions of women and men, and childcare needs that interact with the availability of remote work. Re cessions concentrated among women are deeper and more persistent than those con centrated among men, reflecting weaker within-family insurance and a new empir ical finding that women re-enter employment more slowly after job loss. Yet recov ery from the pandemic recession, which had a disproportionate impact on working women due to school closures and the sectoral distribution of job losses, was surpris ingly rapid. We show that in our model, the expansion of remote work and shifting caregiving norms after the pandemic raise female labor supply and men’s share of childcare, thereby accounting for the observed recovery. These changes permanently increase female participation and narrow the gender earnings gap, but their effect on future recessions is limited: greater labor force attachment among women weakens the added-worker effect but also accelerates labor market re-entry, leading to offset ting effects on aggregate recession dynamics. |
| Keywords: | Recessions, Business Cycle, He-cession, She-cession, Pandemic Recession, Job loss, Added Worker Effect, Gender Equality, Female Employment, School Closures, Childcare, Gender Wage Gap |
| JEL: | D13 E32 J16 J20 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_774 |
| By: | Nozaki, Yuko |
| Abstract: | When a school day disappears, who absorbs it? This paper observes the complete same-day time accounts of children and both parents around Japan's transition to a five-day school week. Under the biweekly regime of 2001, the national time-use survey administratively assigned households to adjacent school and no-school Saturdays, shifting attendance by 40 percentage points; the identical calendar positions in 2006 provide a placebo after the full abolition of Saturday classes in 2002. Mothers' daily market work is a precise zero: equivalence tests reject effects larger than 11 minutes, or 0.06 of a control standard deviation. Children aged ten and older absorb the half-day instead-a child induced to attend loses 58 minutes of sleep, along with television and family time-while fathers work about 25 minutes more. Prefecture-level reduced forms scale with the local first stage while intercepts are indistinguishable from zero, consistent with an attendance channel. After abolition, the baseline comparison shows mothers' Saturday participation falling 4.1 percentage points relative to women aged 25-59 without coresident children under 16; exact age standardization leaves a similar 3.3-point reform-interval estimate with lower precision. School childcare is capitalized into standing arrangements that adjust over longer horizons rather than expressed through mothers' day-to-day labor supply. |
| Keywords: | parental labor supply, childcare, school schedules, time use, children's sleep, intrahousehold allocation |
| JEL: | J22 J13 D13 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1808 |
| By: | Khan, Akib (Department of Economics, Stockholm School of Economics); Lundberg, Erik (Department of Economics, Uppsala University) |
| Abstract: | Aging populations and labor shortages in skill-intensive sectors have led many countries to pursue targeted policies to attract international talent. We study a migration reform in Sweden that offered international doctoral students from outside the EU an easier path to permanent residency. Implemented in 2014, the reform shortened the required period of residence from eight to four years, allowed these students to obtain permanent residency immediately after graduation, and granted their spouses a work permit during their doctoral studies. Using the European students as a comparison group in a difference-in-differences design, we find that the treated international students are 10.5 pp (18%) more likely to stay in Sweden three years after graduation. Higher settlement prospects also increase their language investments and marriage rates during the PhD. These effects are larger for cohorts that have longer exposure to the reform and for those who carry out their doctoral research in STEM. In addition, the reform raises both employment and language investments among the partners of the treated international students. Taken together, the policy increases permanent residency among international graduates as well as leads them and their families to make long-term choices conducive to integration. Finally, using a shift-share design, where we combine the reform with the pre-existing variation in the share of international students across research fields, we find positive peer effects on residency. More international students settling in Sweden increases the probability of their European peers making the same choice. |
| Keywords: | permanent residency; skilled immigration; international doctoral students; language acquisition; family formation; Sweden |
| JEL: | F22 I23 J12 J24 J61 K37 |
| Date: | 2026–08–21 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:ifauwp:2026_015 |
| By: | Bjorkegren, Evelina (Stockholm University); Bütikofer, Aline (Norwegian School of Economics); Conti, Gabriella (University College London); Palme, Marten (Stockholm University); Salvanes, Kjell (Norwegian School of Economics) |
| Abstract: | This study examines the long-term consequences of neonatal health using three birth measures — weight, length, and head circumference. Using linked Swedish and Norwegian population registers with follow-up into adulthood, we compare birth measures of singletons and twins, and find that different birth measures capture distinct aspects of fetal development with varying predictive validity across outcoms. Birth length emerges as the strongest predictor of health outcomes, consistent with its role as a cumulative indicator of skeletal growth throughout gestation. Birth weight retains stronger associations with cognitive and educational outcomes (grade point average [GPA], years of schooling). Head circumference shows weak and inconsistent associations across specifications. Using within-pair head circumference differences to classify twins as symmetrically versus asymmetrically growth restricted, we find that symmetric intrauterine growth restriction is associated with substantially worse long-term outcomes than asymmetric restriction. We also document significant intergenerational transmission of birth anthropometrics. Exclusive reliance on birth weight may obscure important information about early developmental insults. |
| Keywords: | birth weight, birth length, head circumference, twin studies, fetal origins, intrauterine growth restriction, linkage to administrative data |
| JEL: | I14 I12 J13 J24 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18897 |
| By: | Maurizia Di Buono; Sergio Galletta |
| Abstract: | Using linked Finnish administrative records and a staggered difference-in-differences design, we estimate how starting semaglutide (Ozempic) affects work capacity, measured by medically certified sickness absence. The first purchase is followed by persistent use and improved glycemic control, indicating that recorded purchases correspond to sustained and clinically active treatment. The reduction in sickness absence is near zero during months 0–5, becomes progressively larger thereafter, and is largest during months 12–18. Averaged over event months 0–18, sickness allowance receipt falls by 16.9 percent and compensated days by 14.3 percent relative to pre-treatment means. The decline in full-day sickness absence is not offset by greater reliance on unemployment or partial sickness benefits. The results show that semaglutide improves work capacity and can generate economic benefits beyond its direct effects on metabolic health. |
| Keywords: | semaglutide; GLP-1; blood glucose; sickness absence; social insurance; difference-indifferences; type 2 diabetes |
| JEL: | I12 I18 J21 J22 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:sap:wpaper:wp284 |
| By: | Dalle, Axana (Ghent University); Moens, Eline (Ghent University); Van Ootegem, Luc (Ghent University); Verhofstadt, Elsy (Ghent University); Baert, Stijn (Ghent University) |
| Abstract: | This systematic literature review provides a state-of-the-art overview of the effectiveness of workplace interventions aimed at improving workers’ mental well-being. Specifically, it examines which types of interventions are effective for which aspects of mental well-being, both in the short and long term. To this end, we identify 125 randomised controlled trials comprising 147 interventions that vary in their objectives (prevention, treatment, or reintegration), targets (workers or work), methods (cognitive, meditation-based, physical, ergonomic, organisational, or multimethod) and delivery channels (offline, online or hybrid). Mental well-being outcomes are classified as biological and self-reported indicators of the three components of subjective mental well-being (evaluative, affective, and eudaimonic well-being). Overall, we find that, for preventing and treating early mental health symptoms, cognitive or meditation-based interventions targeting personal coping resources appear most promising. In contrast, successful reintegration seems to require a combination of cognitive and organisational interventions, with the latter addressing job demands and resources. |
| Keywords: | mental well-being, workplace, interventions, randomised controlled trials |
| JEL: | C93 I31 J28 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18907 |
| By: | Hie Joo Ahn; Jeremy B. Rudd |
| Abstract: | This paper estimates state-level trend unemployment rates (trend U-star) based on the trend components of unemployment inflows and outflows across unemployment durations. The estimated trend U-stars, particularly the portions attributable to long-termunemployment, have levels and dynamics that vary substantially across states. Long-termunemployment makes a relatively small contribution to trend U-star in agricultural states, but takes a larger share for Rust Belt states and several states in the Sun Belt. While higher educational attainment and population aging put downward pressure on U-star, the effects of industrial structure and labor-market rigidities are mixed. Using the estimates of state-level trend U-star, we revisit previous work on state-level Phillips curves and find that the estimated slopes of forward-looking inflation equations are driven bymovements in trend U-star rather than by cyclical variation in the unemployment rate. |
| Keywords: | trend unemployment rate; natural rate of unemployment; unemployment duration; duration dependence; trend-cycle decomposition; nonlinear state space model; extended Kalman filter; Nelson–Siegel model; new-Keynesian Phillips curve |
| JEL: | C41 C53 E24 E27 E32 J21 |
| Date: | 2026–07–25 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:103715 |
| By: | Isabel Cairó; Hess T. Chung; Francesco Ferrante; Cristina Fuentes-Albero; Camilo Morales-Jimenez; Damjan Pfajfar |
| Abstract: | Labor market variables frequently send conflicting signals about the degree of slack or tightness, often complicating policy assessments at critical junctures. This paper develops a Structural Labor Market Indicator (SLMI) for the U.S. economy that addresses the limitations of existing univariate measures or atheoretical statistical approaches that synthesize multiple labor market indicators but cannot distinguish between supply and demand driving forces. We construct the SLMI using a medium scale New Keynesian DSGE model featuring search and matching frictions, endogenous labor force participation, and variable hours. The model is disciplined by a comprehensive dataset that includes not only labor market variables but also other macroeconomic aggregates. The SLMI synthesizes model-implied gaps across multiple labor market dimensions using principal component analysis. We show that GDP growth and inflation provide substantial information about labor market slack beyond what labor market variables contain, validating our multi-variable structural approach. Relative to alternative measures, the SLMI often provides earlier warnings of deteriorating conditions at recession onset but recovers more gradually during expansions. |
| Keywords: | search and matching; labor market; labor market slack |
| JEL: | E32 J64 J20 E37 |
| Date: | 2026–08–20 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:103679 |