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on Labor Markets - Supply, Demand, and Wages |
| By: | Oleš, Tomáš; Roncone, Francesco |
| Abstract: | Does artificial intelligence automate work or augment workers' productive capabilities? Our results show that it can do both, through distinct channels that conventional exposure measures obscure. We distinguish these channels by linking U.S. patents to occupations' tasks and tools, with patent-task matches capturing automation and patent-tool matches capturing augmentation. Using the origins and diffusion of historical AI breakthroughs to predict contemporary local exposure, we find large but opposing labor-market effects. A one-standarddeviation increase in AI automation reduces occupational employment by 21 percent, with little effect on wages; AI augmentation instead raises wages by 8 percent, alongside some employment growth. We also find that a larger AI share within each channel strengthens labor displacement through automation while shifting augmentation's effects from employment growth toward wage gains. The labor-market consequences of AI therefore depend critically on the balance between automation and augmentation rather than overall exposure alone. |
| Keywords: | Artificial Intelligence, Automation, Augmentation, Local Labor Markets, Occupational Tasks, Occupational Tools |
| JEL: | J23 J24 J30 O33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1821 |
| By: | Drydakis, Nick |
| Abstract: | This study examines whether signalling AI-related digital skills improves employment outcomes for women from underrepresented groups in England, defined by race, age, sexual orientation, and autism-spectrum disclosure. Using correspondence evidence, the study finds that underrepresented women receive fewer interview invitations and are considered for lower-paid vacancies than majority-group women. In pooled analyses, signalling AI-related digital skills increases interview invitations for underrepresented applicants, but does not eliminate the disadvantage. These findings are consistent with AI Capital and productivity-signalling frameworks, as employers appear to value AI-related capabilities while the returns to such credentials remain constrained by persistent demographic inequalities. The study therefore shows that positive returns to AI-related skills and labour-market disadvantage can coexist. Its broader implication is that digital upskilling can strengthen the recruitment prospects of underrepresented women, but cannot by itself deliver parity in employment outcomes. A dual policy response is therefore required, combining wider and more equitable access to AI education and training with stronger anti-discrimination enforcement, greater transparency in shortlisting, improved oversight of recruitment processes, and systematic evaluation of how employers recognise applicant credentials. The study contributes to the economics of AI by linking correspondence evidence to the AI Capital framework and highlighting barriers to converting AI-related resources into meaningful employment opportunities. |
| Keywords: | AI Capital, Artificial Intelligence, Skills, Discrimination, Hiring, Wages, Sexual Orientation, Race, Age, Autism Spectrum |
| JEL: | J71 J24 J31 J64 C93 J15 J16 J14 O33 M51 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1823 |
| By: | Snell, Andy (University of Edinburgh); Almeida, Enzo (University of Torino and Collegio Carlo Alberto); Martins, Pedro (Nova School of Business and Economics); Thomas, Jonathan (University of Edinburgh) |
| Abstract: | How are incumbent workers impacted by minimum wage increases? Is labour market concentration an important moderating factor? We address these questions by presenting a new model, drawing on comprehensive employer-employee matched panel data from Portugal, and considering individual mandated wage rises from both national and collectively bargained minimum wages. We find that employment protection plays a key role in these effects: workers under permanent contracts are almost completely insulated from the exit hazards associated with wage bites while workers in temporary (fixed-term) contracts are exposed to these hazards. Labour concentration can significantly reduce negative effects on temporary workers, by up to 60\%. A model of monopsonistic competition with firing costs rationalises these patterns. |
| Keywords: | minimum wages, collective bargaining, temporary contracts, labour market power |
| JEL: | J23 J38 J42 J63 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18914 |
| By: | Çiğdem Ekiz; Eren Gürer; Erol Taymaz |
| Abstract: | We examine how innovation shapes firm-level workforce dynamics using rich administrative data from Türkiye, a developing economy characterized by medium-technology, incremental innovation. We find that patent-based innovation increases both firm size and average daily wages, with the largest employment gains among workers earning just above the median wage. To uncover the mechanisms behind these outcomes, we construct worker transition matrices. Relative to comparable non-innovative firms, innovative firms (i) retain incumbent workers at higher rates, particularly at the top of the wage distribution, (ii) promote retained workers into higher wage bins more frequently, and (iii) hire more new workers, disproportionately into higher wage bins. Finally, occupational composition analysis shows that employment growth is concentrated among technical and production occupations, consistent with the medium-technology, incremental nature of innovation in our sample. |
| Keywords: | innovation, patents, wages, employment, worker transitions |
| JEL: | J21 J31 O31 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12986 |
| By: | Hirakawa, Marie (Nihon University); Nagase, Nobuko (Otsuma Women’s University); Usui, Emiko (Hitotsubashi University) |
| Abstract: | This paper examines how Japan's 2016 expansion of employees' social insurance coverage affected women's employment and working hours. At firms with 501 or more employees, the reform lowered the prescribed weekly-hours threshold for mandatory pension and health-insurance coverage from about 30 to 20 hours. Using the Labour Force Survey's rotating panel, we study one-year transitions among women aged 45–59 initially working 20–29 nonregular hours, comparing large firms subject to the reform with smaller firms in a difference-in-differences design. Among married women—likely exempt from contributions before the reform as dependent spouses—the probability of remaining at 20–29 hours fell by 7.55 percentage points, while moves below 20 hours and to 30–39 hours rose by 4.57 and 2.66 points, respectively. Among unmarried women—more likely to have paid their own pension contributions—moves to 40–49 hours rose by 11.77 points. Reductions below 20 hours were largest among married women with university-educated or high-earning husbands. Triple-difference estimates show little change in wages or bonuses. Coverage expansion can thus shift hours in opposite directions, depending on workers' prior insurance status and household circumstances. |
| Keywords: | social insurance, Employees’ Pension Insurance, part-time employment, labor supply, married women, Japan |
| JEL: | J16 J22 J31 J32 J38 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18919 |
| By: | Alemán-Pericón, Christian |
| Abstract: | I study how human validation requirements shape the response of wages and labor demand to AI adoption. I introduce fixed, recurring validation labor into a general equilibrium task model with endogenous AI adoption. It features a validation threshold determining whether the labor created by AI adoption offsets the productive labor it displaces after accounting for demand expansions. I estimate the model using U.S. occupation-task data on human versus AI involvement at work, and AI adoption rates. The estimated U.S. validation requirement lies below the threshold, implying that productive labor displacement dominates and wages fall. For the occupations in the estimation sample, a ten year projection of declining AI costs raises adoption from 18 to 62 percent and nearly triples output, while reducing employment by 13 percent and wages by 43 percent. Extending the exercise to the entire U.S. economy attenuates the employment and wage declines to 5 and 18 percent, respectively. |
| Keywords: | Artificial Intelligence, Technology Adoption, Validation Labor, Labor Demand, Task-Occupation Labor |
| JEL: | E17 E24 J22 J23 J31 O33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:343972 |
| By: | Gabriela Galassi; Gaelan MacKenzie |
| Abstract: | We estimate the direct effects of robot adoption on the within-firm distribution of income between non-owner workers and individual owners in Canadian private corporations. We link firm-level data on industrial robot imports to matched owner-worker-firm data that identify owners of private corporations, their employment income, and firms’ dividend payments to owners and retained earnings. Robot adoption is associated with sizable increases in firm revenues, value added, and non-owner employment and payroll. Unlike several studies of robot adoption in other settings, we find little evidence that adoption reduces adopters’ conventionally measured labor share of value added; if anything, the non-owner labor share increases slightly, while the total owner income share does not rise. Owners nevertheless benefit from adoption, but primarily through increases in employment income. These results underscore the importance of distinguishing owner employment income from ordinary worker payroll for measuring how firm-level technology shocks affect workers, owners, and the distribution of income within firms. |
| Keywords: | Structural challenges; Digitalization and productivity |
| JEL: | D D2 D22 D3 D33 J J2 J23 J3 J31 O O3 O33 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bca:bocawp:26-34 |
| By: | Cigdem Ekiz (UNU-MERIT, Maastricht University , UNU-MERIT, Maastricht, the Netherlands); Eren Gurer (Department of Economics, Middle East Technical University, Ankara, Turkiye); Erol Taymaz (Department of Economics, Middle East Technical University, Ankara, Turkiye) |
| Abstract: | We examine how innovation shapes firm-level workforce dynamics using rich administrative data from Türkiye, a developing economy characterized by medium-technology, incremental innovation. We find that patent-based innovation increases both firm size and average daily wages, with the largest employment gains among workers earning just above the median wage. To uncover the mechanisms behind these outcomes, we construct worker transition matrices. Relative to comparable non-innovative firms, innovative firms (i) retain incumbent workers at higher rates, particularly at the top of the wage distribution, (ii) promote retained workers into higher wage bins more frequently, and (iii) hire more new workers, disproportionately into higher wage bins. Finally, occupational composition analysis shows that employment growth is concentrated among technical and production occupations, consistent with the medium-technology, incremental nature of innovation in our sample. |
| Keywords: | innovation, patents, wages, employment, worker transitions |
| JEL: | J21 J31 O31 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:met:wpaper:2604 |
| By: | Kardaslar, Berfin; Kritikos, Alexander S.; Menkhoff, Lukas |
| Abstract: | In this study, we examine the relationship between personality traits, captured by risk tolerance and the Big Five traits, and firm size, as measured by the number of employees. We show that the personality of entrepreneurs matters for the size of their firm they operate. We use a novel add-on to the German Socio-Economic Panel that includes a sub-sample of owner-managers running larger firms. High levels of risk tolerance - associated with an increased likelihood of firm exit in existing research - is positively associated with firm size for entrepreneurs in the market. High scores in extraversion are also associated with larger firms. However, a high level of openness for experience, a main driver of founding ventures, is negatively related to firm size. Overall, we show that running larger firms is associated with traits that are partially different from those that increase the likelihood of entrepreneurial entry or survival. |
| Keywords: | Entrepreneurship, Risk tolerance, Personality traits, Firm size |
| JEL: | L26 D81 J24 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1815 |
| By: | Erol Taymaz (Department of Economics, Middle East Technical University, Ankara, Turkey); Kamil Yılmaz (Department of Economics, Koç University, İstanbul, Turkiye) |
| Abstract: | The employment effect of a minimum-wage increase depends on the wage-setting power of employers. The empirical literature, however, has measured this power only indirectly, through labor-market concentration. In this paper, we estimate firm-level product markups and wage markdowns for Turkish manufacturing firms using the Entrepreneur Information System (EIS) administrative micro-data. We show that a firm’s initial markdown predicts the sign and magnitude of its direct employment response to minimum-wage increases, including the exceptionally large January 2016 increase (33% nominal, ≈25% real). At minimum-wage firms with no markdown, employment falls year after year. At high-markdown firms that face the same wage floor, employment does not fall. The monopsony model can explain this difference, whereas the competitive model predicts employment losses for both groups of firms. Among firms paying the minimum wage, employment growth increases with the initial markdown in every year over 2013–2019: conditional on sector-year and province-year effects, high-markdown minimum-wage firms grow 6 to 9 log points faster annually than zero-markdown firms paying the same wage. |
| Keywords: | minimum wage, monopsony, labor market power, markdowns, markups, employment, production function estimation, Turkey |
| JEL: | D24 J23 J31 J38 J42 L11 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:met:wpaper:2605 |
| By: | Bonin, Simone Maria (Danmarks Nationalbank and Aarhus University); Gorshkov, Andrei (IFAU - Institute for Evaluation of Labour Market and Education Policy) |
| Abstract: | We study the transmission of firm-specific export shocks through labor markets, examining how these shocks influence workers’ wages at competing firms via labor market competition. Using rich Danish administrative data, a flexible, empirically driven definition of workers’ outside options, and an identification strategy based on world import demand shocks, we show that both own-firm and competitor export shocks raise incumbent workers’ wages. These export-driven shocks also trigger competitive worker reallocation, as expanding exporters poach workers from other firms. The results indicate spillover effects of export shocks extending to non-exporting firms. |
| Keywords: | labour market competition; export shocks; worker outside options |
| JEL: | F16 J23 J31 J63 |
| Date: | 2026–09–08 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:ifauwp:2026_016 |
| By: | Vitor C. Melo; David Neumark; Liam Sigaud; Gary A. Wagner |
| Abstract: | We study the employment effects of California’s $20 fast-food minimum wage. Evaluating this policy poses two challenges in commonly used aggregate datasets: coverage is based on 60-establishment chain-size threshold that cannot be identified; and there is measurement error in the industry codes used to identify fast-food restaurants. We address these challenges using establishment-level data. We find evidence of negative employment effects, but they are concentrated among small chains, among which the policy also slowed entry and increased exit. Thus, the primary effect of the fast-food minimum wage was to disadvantage small chains, albeit with modest overall employment effects thus far. |
| JEL: | J23 J38 J4 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35749 |
| By: | Henrik Kleven; Owen M. Zidar |
| Abstract: | We characterize optimal labor and capital income taxation in a task-based model of automation. Workers and machines are perfect substitutes in automatable tasks, which run from the bottom of the skill distribution up to a threshold. Workers supply labor on the extensive margin. Capitalists supply machines at a finite elasticity. In this general-equilibrium automation economy, optimal tax formulas take canonical partial-equilibrium forms. Yet automation substantially changes optimal tax rates because wages and capital returns are endogenous. We calibrate the model to the US wage distribution and automation exposure. In equilibrium, the middle class is the most automated, with machine intensity peaking around the 40th wage percentile. Relative to a no-automation benchmark, the optimal labor tax schedule is more progressive: a larger EITC subsidy at the bottom, lower taxes in the middle, and higher taxes at the top. The optimal capital tax is sizable but unaffected by automation. |
| JEL: | H21 H31 H32 J21 J31 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35747 |
| By: | David Neumark; Jyotsana Kala |
| Abstract: | We provide a comprehensive analysis of the effects of minimum wages on blacks, and on the relative impacts on blacks vs. whites. We study not only teenagers – the focus of much of the minimum wage-employment literature – but also broader low-skill groups. We find no evidence that higher minimum wages reduce wage disparities. First, much of our evidence points to job loss effects from higher minimum wages are more evident for blacks – and more so for black men – but not detectable for whites. Second, in many of our analyses the effects of minimum wages are large enough to generate adverse effects on earnings (and relative earnings) of blacks. Third, given strong residential segregation by race in the United States, more adverse effects of minimum wages on blacks would fall on areas with a high black population share, and this appears to be accentuated by evidence that minimum wage effects are more adverse in areas where blacks are a very high share of the population, regardless of individual race. |
| Keywords: | minimum wages, race |
| JEL: | J23 J38 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12971 |
| By: | Manasi Deshpande; Alessandra Voena; Jason B. Weitze |
| Abstract: | We estimate the effect of receiving Supplemental Security Income (SSI) in childhood on adult outcomes using multiple sources of variation. Using variation across and within two quasi-experiments, we find that the program has heterogeneous effects that vary with the parental earnings response to SSI benefits: the program has positive effects on children when parents do not adjust their labor supply in response to SSI income (meaning household income increases), but zero or negative effects on children when parents offset the transfer by reducing earnings (meaning household income remains constant or falls). These results suggest that, relative to parent non-work time, income is crucial in the human capital production of low-income children with disabilities. We estimate a model of maternal labor supply and child human capital formation to quantify the relative importance of these channels. Our findings indicate that 1) the income effects of SSI on children's human capital are substantial, with a limited role for perverse incentive effects from conditioning benefits on disability status, and 2) parental work on net improves children's outcomes by increasing household resources, despite the potential decrease in parental time. |
| JEL: | I38 J13 J14 J22 J24 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35725 |
| By: | Cirillo, Valeria; Divella, Marialuisa; Simone, Giuseppe |
| Abstract: | This paper examines the drivers of income inequality across Italian provinces, focusing on the interaction between digitalisation and labour market flexibility. Using a novel provincial panel that combines Italian Labour Force Survey (LFS) data with detailed information on tasks from the INAPP-ISTAT Survey on Italian Occupations (ICP) and tax-based income records from Italian Ministry of Economics and Finance (MEF), we show that a higher incidence of non-standard employment reduces the labour share, lowers average employment income, and increases the gap between high- and low-income earners. Digitalisation, measured through the digital task intensity of local occupations, is associated with higher average incomes but also greater income polarisation. However, the income gains from digitalisation weaken and eventually disappear in provinces characterised by more precarious employment. Overall, the findings suggest that the digital transition, in the absence of stronger labour market protections, may reinforce rather than reduce territorial disparities. |
| Keywords: | Non-standard work, Digitalisation, Wage inequality, Labour-market dualisation, Regional inequality, Italian provinces |
| JEL: | J31 J41 J42 O33 R23 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1816 |
| By: | Hossain, Mohammad Zariab (Department of Economics, Uppsala University) |
| Abstract: | This paper provides the first causal evidence of behavioral spillovers in public employment services (PES). Using rich Swedish administrative data from 2004–2018 and a difference-in-differences design exploiting caseworker moves across local PES offices, I show that caseworker’s broader vacancy referral behavior—vacancy referrals outside a job seeker’s stated preferences—responds strongly to the local work-practice styles. I also examine how these practice-environment shocks of the movers (caseworkers) affect their job seekers. Taken together, the evidence suggests that local referral practices and the surrounding organizational environment play an important role in shaping caseworker behavior, with consequences for job seekers’ reemployment prospects. |
| Keywords: | occupational mismatch; caseworkers; peer effects; job search; public employment services; active labor market programs; difference-in-differences |
| JEL: | C21 I38 J24 J24 J64 J68 |
| Date: | 2026–09–17 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:ifauwp:2026_018 |
| By: | Federica Coelli (European Bank for Reconstruction and Development, CEPR, and CESifo); Difei Ouyang (University of International Business and Economics); Weidi Yuan (Nanjing University); Yuan Zi (Geneva Graduate Institute, CEPR, and CESifo) |
| Abstract: | This paper shows that human capital accumulation can accelerate structural transformation without accelerating growth. We study China's 1999 higher education expansion, a large, rapid, and largely unanticipated increase in college graduates. We find that more exposed prefectures experienced larger increases in the skilled-labor share and shifted employment and value added from agriculture toward services. The reallocation extended to low-skilled workers. Consumer services absorbed most of the increase in employment, while producer services accounted for a disproportionate share of high-skilled employment growth. Yet more-exposed prefectures did not grow faster. A four-sector model rationalizes these patterns, showing how greater skill supply can generate broad-based servitization, but also a Baumol-type growth penalty when labor reallocates toward slower-growing sectors. Our findings highlight that the payoff to higher education depends not only on how much skill it creates, but also on whether the resulting structural transformation directs resources toward the economy's engines of productivity growth. |
| Keywords: | Human Capital; Structural Transformation; Higher Education Expansion; Servitization; China |
| JEL: | I25 J24 L16 O11 O14 |
| Date: | 2026–09–18 |
| URL: | https://d.repec.org/n?u=RePEc:gii:giihei:heidwp27-2026 |
| By: | C. Kirabo Jackson |
| Abstract: | A large literature posits a central role for human capital in determining macroeconomic output, while another documents substantial private returns to educational investment. However, whether private gains translate into aggregate gains remains uncertain, as signaling, displacement, or general-equilibrium adjustment may drive a wedge between private and aggregate returns. This paper bridges these literatures with causal evidence that state-level school finance reforms (SFRs) increase macroeconomic output. First, I combine design-based micro estimates of SFR effects on private earnings with a cohort replacement framework to simulate state-level earnings per worker. The simulation predicts little change for 10 to 15 years, then gradual gains as treated cohorts enter the labor force, reaching 7.8 percent after 60 years. Next, I test this prediction using the staggered implementation of SFRs across U.S. states. In an event-study framework, state-level earnings per worker track the predicted path, remaining flat through about 15 years before rising roughly 4.7 percent above counterfactual levels after 30 years — consistent with private earnings gains aggregating to the broader economy. Finally, I show that these effects extend to broader economic output, with GDP per capita declining modestly initially before rising to more than 5 percent above its counterfactual path after 30 years. |
| JEL: | E24 H52 I22 I26 J24 O47 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35755 |
| By: | D'hert, Liam (Ghent University); Baert, Stijn (Ghent University); du Bois, Kristen (EDHEC Business School) |
| Abstract: | Workers who proactively exit employment to prevent burnout and preserve their mental health are, by their own logic, making a deliberate investment in long-term employability. Yet, related research on backlash against leave-taking suggests that employers may interpret this decision very differently at labour market re-entry. Using a preregistered vignette experiment in which professional recruiters evaluated 1, 176 simulated LinkedIn profiles, we examine how such self-directed mental health breaks, popularised as ‘micro-retirements’, shape hiring evaluations. We find that applicants returning from such breaks face hiring penalties as severe as those attached to burnout-related absences. Mechanism analyses reveal why: recruiters read these interruptions primarily as signals of ideal worker norm violation, alongside skill deterioration, while failing to recognise their proactive character. This mismatch between worker perspective and employer interpretation carries implications for hiring practice, workplace mental health, and career theory. |
| Keywords: | career break, mental health, burnout, unemployment, inactivity, hiring chances, stigma, factorial survey experiment, micro-retirement |
| JEL: | C91 I12 J24 J64 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18927 |
| By: | Alexandra Glazova (Bank of Russia, Russian Federation) |
| Abstract: | In this paper, I introduce labour market mechanisms used in partial equilibrium models, microdata econometric studies, and research in psychology and sociology to an agent-based macroeconomic model. These mechanisms include skill-based worker switching, skill loss during unemployment, and the skill-dependence of wages. I show that when a large supply shock occurs, these complexities prevent GDP from fully recovering, at least in the medium term: the GDP gap between the shock and no-shock scenarios persists even five years after the shock, whereas no such difference is observed in the baseline model. I also show that the aggregate modelling shock affects different industries differently, and this effect is statistically significant depending on the level of skills required in a given industry. Finally, I demonstrate that training programmes for new workers in just the two most affected industries have a comparable impact to training a much larger number of workers with no industry-specific constraints. |
| Keywords: | Agent-Based Modelling, Simulation Modelling, Labour Market Frictions, Human Capital, Labour Mobility, Wages, Employment, Formal Training Programmes, Learning by Doing, Skill, Retraining, Skill Based, Career Change, Occupational Mobility, Job Search, Retraining Programme |
| JEL: | C63 J24 J31 J62 J63 J64 J68 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:bkr:wpaper:wps176 |
| By: | Docquier, Frédéric (LISER); Dominici, Alice (IMT Lucca); Fernández, Martín (LISER); Mariani, Fabio (Université catholique de Louvain) |
| Abstract: | This paper uses a historical quasi-natural experiment to provide causal evidence on how networks and diversity affect migrants' economic outcomes in a rural setting. Between 1932 and 1941, Italy's Fascist government relocated about 4, 000 families to the Pontine Marshes, a formerly malarial, sparsely inhabited area undergoing massive reclamation. Settlers from different provinces were quasi-randomly assigned to plots, providing plausibly exogenous variation in neighborhood composition. Using data on the universe of settlers, we find that larger common-origin networks significantly increase the likelihood of long-term settlement and land purchase. Greater neighborhood diversity worsens economic performance on average, largely by reducing network externalities, but benefits settlers who lack common-origin ties. Network effects operate, at least partly, through higher productivity, with no evidence of knowledge transmission. Instead, our results point to cooperation and mutual support as the main channel. Effects are concentrated among families under the greatest strain and those from origins historically more reliant on bonding social capital. Network effects are also stronger when neighbors arrive at the same time and live nearby. |
| Keywords: | migration, networks, diversity, productivity, agriculture |
| JEL: | D85 J24 J61 N54 O13 O15 O40 R23 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18931 |
| By: | Nga, Le Thi Quynh; Heshmati, Almas |
| Abstract: | Labor market conditions (LMC) play an important role in business development (BD) and provincial income, yet their interaction at the provincial level in Vietnam remains underexplored. This study examines how LMC are associated with BD and Gross Regional Domestic Product (GRDP) per capita across 63 provinces during 2018-2023, using data from the Vietnam General Statistics Office (GSO) and the Provincial Competitiveness Index (PCI). A simultaneous equation framework estimated by three-stage least squares (3SLS) is applied to capture the interdependence between enterprise density and GRDP per capita. The findings reveal a nonlinear and bidirectional relationship, with diminishing marginal effects at higher development levels. LMC and selected PCI dimensions are associated with enterprise activity and income differences, while regional disparities persist. The results highlight the importance of balanced regional development, improved labor allocation, and stronger institutional quality to support sustainable BD and reduce provincial gaps. |
| Keywords: | Business development, Labor market conditions, Provincial Competitiveness Index, GRDP per capita, Vietnamese provinces |
| JEL: | J21 J24 L26 R11 C33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1817 |
| By: | Matthew S. Johnson; David Levine; Michael W. Toffel |
| Abstract: | Regulatory inspections might affect entities nearby those inspected. Such spillovers are difficult to identify because regulators target inspections and neighboring establishments face correlated shocks. We exploit the U.S. Occupational Safety and Health Administration’s Site-Specific Targeting (SST) program, which generated quasi-random variation in inspections among workplaces with injury rates near a discrete cutoff. An SST inspection reduced injuries at uninspected same-ZIP-code establishments by an estimated 11 percent—an effect roughly as large as the direct effect on the inspected establishment. Because spillovers extend to multiple nearby establishments, they avert several times as many injuries as the inspection’s direct effect. |
| JEL: | I18 J28 L51 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35646 |
| By: | Xia, Yiming; Zhang, Anwen; Wang, Weidong; Wen, Ming |
| Abstract: | Curiosity motivates learning yet has rarely been studied in economics. Using random assignment to classrooms in the first year of middle school, we document persistent and long-term effects of peer curiosity that extend into early adulthood. A 10- percentage-point increase in the share of highly curious peers raises higher education enrollment by 4.7 percentage points after seven years, against a baseline rate of 68 percent, with gains concentrated in four-year bachelor's programs. Exploratory analyses point to higher aspirations, better time management, and greater parental investment as plausible mechanisms. These results suggest that curiosity generates lasting social returns. |
| Keywords: | Curiosity, Peer Effects, Adolescents, Educational Attainment |
| JEL: | I21 I23 J24 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1818 |
| By: | Petter Lundborg; Adrian Nieto |
| Abstract: | We examine how early exposure to STEM professionals in the local neighborhood shapes children’s long run educational and labor market outcomes. To identify causal effects, we use Swedish register data and several sources of variation in exposure to STEM qualified neighbors measured at the 100 by 100 meter grid. Exposure during compulsory education raises children’s math performance, and evidence points to social ties as the main channel. It also increases the presence of boys and girls in science programs in high school and university, but mainly boys are more likely to complete a STEM bachelor degree. This gender gap persists into adulthood: STEM employment and earnings rise predominantly for boys. The results show that high skill professionals can serve as community based informal role models and that neighbors can shape long run educational and labor market trajectories. |
| Keywords: | STEM, science, neighbors, role model, human capital, labor trajectory |
| JEL: | I2 J2 J3 O3 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12955 |
| By: | Makaaru Arinaitwe, Jacklyn (Ace Policy Research Institute); Bogere, George (Ace Policy Research Institute); Fiore, Anna (World Bank); Herskowitz, Sylvan (World Bank); Lang, Megan (World Bank); Mwesigye, Francis (Uganda Development Bank); Nalumansi, Tracy (Nova SBE) |
| Abstract: | Childcare burdens limit productivity among women in the informal sector, but we know little about the optimal design of childcare support. We randomize 883 women market vendors in Kampala, Uganda to receive free workplace- or community-based childcare. Free childcare redistributes caregiving away from household members, raises women’s hourly earnings, and improves child development and women’s well-being. Community centers achieve higher utilization and larger gains in development and well-being, while workplace centers generate larger economic impacts. Both models have a high marginal value of public funds. Community centers currently dominate, but workplace-based centers could prove superior if operated at scale. |
| Keywords: | labor, childcare, gender, time use, early child development |
| JEL: | O12 O18 J13 J22 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18910 |
| By: | Fuchs-Schündeln, Nicola (WZB - Social Science Research Center Berlin); Jessen, Jonas (WZB - Social Science Research Center Berlin); Ong, Pinchuan (National University of Singapore); Pan, Jessica (National University of Singapore) |
| Abstract: | We assess whether survey responses to hypothetical policy scenarios can recover actual labor supply responses from policy variation. We study the German Mütterrente, a pension benefit crediting parents for child-rearing, benchmarking against Artmann et al. (forthcoming). Surveying mothers and fathers about a hypothetical reform modeled on that expansion, we find that mothers expect to reduce their labor supply, with an implied marginal propensity to earn of −0.65–close to the quasi-experimental estimate of −0.54. The response is sensible across subgroups, falls mainly on the extensive margin, and spills over to fathers. In the aggregate, spousal predictions match partners’ own reports. |
| Keywords: | marginal propensity to earn, pension reform, hypothetical scenarios |
| JEL: | J22 H55 D84 J26 D10 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18944 |
| By: | Antonio Accetturo (Bank of Italy); Michele Cascarano (Bank of Italy); Andrea Locatelli (Bank of Italy) |
| Abstract: | Zombie firms may hinder growth not only via capital misallocation, but also by tightening local labor markets. This paper studies whether zombie prevalence weakens healthy firms' ability to expand employment when they face positive export-demand shocks. Using Italian firm-level data for 2015-23, we exploit the variation in the incidence of employment in zombie firms over active population at local labor market level and firm-specific exposure to exogenous export-demand shocks constructed with a shift-share design. We show that firms located in local labor markets with a higher share of employment in zombie firms exhibit a weaker employment response to foreign-demand shocks. Effects are strongest for white-collar workers and for micro and small firms, consistent with tighter constraints on scarce skills and greater reliance on local hiring. Results are robust to alternative zombie definitions and shock constructions. |
| Keywords: | zombie firms, labor hoarding, labor misallocation, foreign demand shocks, local labor markets |
| JEL: | J23 D22 G33 R23 F16 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bdi:opques:qef_1058_26 |
| By: | Yana Gallen; Melanie Wasserman |
| Abstract: | This paper provides the first causal evidence that gender affects the information an individual receives about careers. We conduct a large-scale field experiment in which real college students seek career information from 10, 000 working professionals. We randomize whether a professional receives a message from a male or a female student. When students ask broadly for information about a career, female students receive substantially more information on work/life balance than male students. This gender difference persists when students specifically ask about work/life balance. A survey of professionals suggests non-altruistic motives for discussing work/life balance with women. Combining findings from the field experiment and results from an information intervention, we conclude that gender gaps in information received about work/life balance are consequential for gender gaps in career intentions. |
| JEL: | C93 J16 J24 J71 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35750 |
| By: | Cherchye, Laurens (University of Leuven); De Rock, Bram (ECARES); Vermeulen, Frederic (University of Leuven) |
| Abstract: | Standard household-level data hide substantial heterogeneity in how consumption, money, and time are allocated within households. This motivates the need for measuring welfare at the individual level and a structural approach on how household data can be used to capture these differences. After documenting what can be learned from direct survey evidence, we present the collective approach as an attractive framework for modeling intra-household decision-making with preference heterogeneity, public consumption, and home production. We then survey three identification strategies that recover individual preferences and resource shares from widely available datasets: differential, revealed preference, and preference-similarity methods. Applying these tools reveals that a sizable share of overall inequality originates within households and that individual poverty rates often diverge sharply from household-level measures. Overall, our review demonstrates that measuring welfare at the individual level fundamentally reshapes our understanding of inequality, and offers practical guidance for incorporating intra-household heterogeneity into empirical welfare evaluations. |
| Keywords: | individual welfare measurement, intra-household inequality, collective household consumption, sharing rule, time use |
| JEL: | D13 D31 I32 J22 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18941 |
| By: | Matteo Sartori (Bank of Italy); Marco Guido Palladino (Banque de France, IZA); Eliana Viviano (Bank of Italy) |
| Abstract: | This paper examines how Italian firms use fixed-term contracts (FTCs) and documents the relative importance of seasonal needs, worker screening and buffer-stock motives. Using matched employer–employee data for 2013–2017 merged with firm-level balance-sheet information, we select a set of firms that systematically rely on temporary employment, generating over 85 per cent of its total volume. By focusing on these firms, we show that two ex ante contract features - the seasonal label and the initial duration - are highly informative about firms' hiring intentions. Use of seasonal contracts is limited and concentrated in a narrow set of sectors, while longer initial durations strongly predict conversion into permanent jobs, reflecting screening behaviour driven mainly by firm-specific factors. In contrast, most FTCs are short, non-seasonal and concentrated in firms dealing with lower productivity and higher revenue volatility, consistent with buffer-stock adjustment. A clustering exercise confirms that about 10 per cent of firms predominantly use seasonal contracts, one fourth use FTCs for screening, and roughly 65 per cent rely on them to manage uncertainty. |
| Keywords: | fixed-term contracts, screening, contract conversions, seasonal workers, productivity |
| JEL: | J23 J41 J63 L23 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:bdi:wptemi:td_1543_26 |
| By: | de la Fuente Stevens, Diego (University of Sussex); Marchais, Gauthier (Institute of Development Studies); Brandt, Cyril (Institute of Development Studies); Holland-Szyp, Carolina (Institute of Development Studies); Matabishi, Samuel (Institut Supérieur Pédagogique de Bukavu) |
| Abstract: | Why do teachers remain in schools affected by prolonged crisis? Using longitudinal data on 1, 831 teachers across 124 schools in Niger and the Democratic Republic of the Congo, we examine the drivers of school-level teacher retention over three survey rounds. We find that retention is shaped primarily by local embeddedness, pay, and exposure to violence. Higher salaries are associated with retention, but almost entirely among teachers who have not always lived in the village where they teach. Pay and local embeddedness therefore operate as alternative rather than cumulative retention margins. Local embeddedness is among the strongest correlates of retention, but mainly for male teachers. Exposure to violence is the strongest predictor of exit, with effects roughly twice as large for women as for men. These findings highlight the relational, material and gendered dimensions of teacher retention in conflict-affected settings. |
| Keywords: | Sub-Saharan Africa, Job turnover, Teacher retention, Conflict-affected education, Violence exposure, Gender |
| JEL: | I25 J45 D74 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18917 |
| By: | Maarten Meeuwis; Dimitris Papanikolaou; Lawrence D.W. Schmidt |
| Abstract: | We study how aggregate financial conditions shape firm insurance and, through it, labor income risk. In a directed search model with dynamic wage contracts and two-sided limited commitment, firm insurance against idiosyncratic shocks erodes when risk premia rise. Using U.S. administrative data, we document new evidence supporting the model: pass-through of firm shocks to earnings rises in bad times, especially for lower-paid workers near the separation margin. The model reproduces many untargeted time-series and cross-sectional features of earnings risk and implies substantial welfare costs of idiosyncratic risk, high private discount rates on human capital, and large gains from recession-contingent transfers. |
| JEL: | D52 E0 E24 E32 E44 G0 G12 J0 J08 J31 J41 J63 J64 J65 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35781 |
| By: | Dunia, Arsène Buzima |
| Abstract: | Does debt overhang distort only investment? This paper analyzes the subsequent effects of debt overhang on firm-level outcomes. Using an event study for German firms from 2004 to 2021, we find that, relative to comparable firms in the same industry and year, highly indebted firms do not merely invest less, which is the classic overhang result. They also hire less, and the two margins together translate into slower sales growth. The composition of the adjustment, however, depends on the firm's growth regime. Highly indebted firms that keep expanding slow their hiring but raise capital per worker over the long run, substituting capital for labour along a flatter expansion path. Highly indebted firms that contract shed workers with no offsetting change in capital intensity: they scale down rather than restructure. These patterns hold in normal times as well as in crises and are concentrated among small and medium-sized limited-liability firms. Debt overhang is therefore not a pure investment wedge but a persistent drag on firm scale, whose incidence across inputs is determined by whether the firm is growing or shrinking. |
| Keywords: | capital-labour substitution, debt overhang, employment, firm growth, firm leverage |
| JEL: | D22 E22 E24 G31 G32 J23 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwhdps:344000 |
| By: | Ohto Kanninen (Labour Institute for Economic Research LABORE); Hannu Karhunen (Labour Institute for Economic Research LABORE); Sanni Kiviholma (Labour Institute for Economic Research LABORE); Jeremias Nieminen (Labour Institute for Economic Research LABORE) |
| Abstract: | Several countries use immigration liberalization as a place-based policy tool, but evidence on its regional effects remains almost entirely descriptive. We examine the causal impact of removing labor market testing (LMT) regulations for labor immigrants in all occupations in the remote Finnish region of North Karelia. The reform allowed firms to hire non-EU foreign workers in all occupations without first advertising jobs to domestic applicants, resulting in a 14% rise in the stock of immigrant workers. Using synthetic control and difference-in-differences methods, we estimate causal effects of the reform at the regional, municipal, firm establishment, and individual levels. The reform caused immigrant inflows to increase primarily in cities and in specific types of occupations, i.e., low-paying occupations and ISCO groups 5, 7, 8, and 9. Across the firm size distribution, the increases concentrate around the median and the top. We find little evidence that the policy had meaningful effects on other regional or municipal outcomes: immigration liberalization boosted labor supply without generating transformative medium-term regional effects. |
| Keywords: | immigration, labor supply, aging population, regional economy, labor market testing, synthetic control, difference-in-differences |
| JEL: | R11 R58 J20 J38 J61 J68 |
| Date: | 2026–09–09 |
| URL: | https://d.repec.org/n?u=RePEc:pst:wpaper:365 |
| By: | Gaetano Basso (Bank of Italy); Francesca Carta (Bank of Italy); Concetta Rondinelli (Bank of Italy); Federico Tullio (Bank of Italy); Francesca Zanichelli (Bank of Italy) |
| Abstract: | We investigate the decoupling between consumption and income observed in the aftermath of the COVID-19 crisis, focusing on the role of improved labour market conditions. We first estimate differences in households' marginal propensities to consume (MPCs) applying a standard empirical framework to the 2016 and 2022 waves of Banca d'Italia's Survey on Household Income and Wealth, which we treat as representing the pre- and post-pandemic periods. We then assess the contribution of labour market dynamics to changes in the aggregate MPC using an Oaxaca–Blinder-type decomposition method. Finally, combining these estimates with data from Istat’s Labour Force Survey, we evaluate the role of labour market developments in shaping the evolution of the aggregate MPC through 2024. Our results indicate that MPCs declined across households, on average, and that recent employment growth was concentrated among groups with relatively low MPCs, exerting significant downward pressure on the aggregate MPC. |
| Keywords: | consumption pattern, disposable income, Covid-19, demographics, employment |
| JEL: | D14 E21 C52 J11 J21 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:bdi:opques:qef_1034_26 |
| By: | Aguilar-Bohorquez, Joseph (University of Minnesota); Goldhaber, Dan (University of Washington); Grout, Cyrus (University of Washington); Mykerezi, Elton (University of Minnesota); Pathak, Prayash (University of Minnesota); Sojourner, Aaron (Upjohn Institute for Employment Research) |
| Abstract: | Employers often use open-ended questions in hiring, but usually responses aren't recorded, and knowledge about the usefulness of such responses is limited. This study investigates properties of written responses to open-ended questions collected over many years via an application tracking platform that school districts use to hire teachers. We develop a scalable process to discover topics within the corpus of responses to each question and to score documents. It adapts a traditional qualitative topic modeling approach, Inductive Thematic Analysis, to combine the strengths of researcher judgment and large language models while preserving interpretability and transparency. Questions elicit distinct information regarding a candidate’s pedagogical skills, classroom management, professional philosophy and growth mindset, relational and cultural competence, and other professional attributes. Questions regarding classroom activities and student progress generate more dispersion in responses across applicants and fewer extreme demographic selection ratios. This framework empowers researchers and practitioners to assess language-based hiring instruments transparently and to monitor potential demographic disparities. |
| Keywords: | education, hiring, teachers, topic modeling |
| JEL: | H75 I21 J45 D83 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18942 |
| By: | Johannes Geyer; Peter Haan; Mia Teschner-Hofmann; Felix Weinhardt |
| Abstract: | Rising life expectancy and demographic change have increased the share of older workers, making their health and productivity central to aging societies. We study whether longer working lives translate into investments in work-related health before retirement. Exploiting a pension reform in Germany in a Regression Discontinuity Design, we show that women facing longer careers are more likely to apply for work-related rehabilitation, particularly those in poorer health or with weaker labor market attachment. Despite higher application and approval rates, this demand does not translate into higher rehabilitation completion. Together with intermediate outcomes, our findings are most consistent with capacity constraints in program delivery. |
| Keywords: | Rehabilitation, Aging Societies, Health Investments, Pension Reform |
| JEL: | H55 I12 J26 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2179 |
| By: | Robert Fairlie; Jane Wu; Robert W. Fairlie |
| Abstract: | The impact of AI on the employment prospects of recent college graduates is hotly debated with no consensus on the magnitude of impacts nor even the timing of those potential impacts. Using CPS microdata, we provide the first estimates of the effects of AI on the unemployment of recent college graduates in June, July and August 2026. We provide evidence suggesting that unemployment rates are especially high for summer months and that 2026 might be the first year of widespread enough AI use in the workplace to detect impacts of AI on recent college graduates, the group argued to be most vulnerable to AI replacement. Taking an agnostic approach to defining treatment timing, we find that unemployment rates did not spike in summer 2026 relative to summer months in previous years and did not rise in a significant way relative to older college graduates or young workers without a college degree. We also provide the first analysis of an expanded definition of unemployment that includes those who report “wanting a job” which adds nearly two percentage points to the unemployment rate of recent college graduates but we find no evidence of a statistically significant increase in summer 2026 even after adding these “sidelined unemployed.” We estimate difference-in-differences and event-study interaction models using both older college graduates and young non-college graduates as comparison groups and do not find evidence of an increase in relative unemployment rates. Finally, we estimate models in which we interact 2026 unemployment with AI exposure and remote work availability by occupation and find some evidence of a positive relationship with remote work availability. |
| Keywords: | AI, technological change, unemployment, job loss, college graduates |
| JEL: | J21 J24 J63 J64 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12994 |
| By: | Cahuc, Pierre (Sciences Po, Paris); Carry, Pauline (Princeton University); Malherbet, Franck (Paris Graduate School of Economics, ENSAE); Martins, Pedro (Universidade Nova de Lisboa) |
| Abstract: | Employment protection legislation often varies with firm or establishment size and age, and many evaluations of EPL reforms exploit these thresholds. This paper develops a search-and-matching model with multi-establishment firms to disentangle direct effects from general-equilibrium spillovers. We combine the model with quasi-experimental evidence from a 2009 Portuguese reform that restricted fixed-term contracts in young establishments of large firms. Spillovers barely distort the reduced-form estimate, yet they overturn the aggregate conclusion: extrapolating the reduced-form estimate implies a 1.51% employment decline, compared with a 0.11% increase in general equilibrium. Counterfactuals show that conditioning EPL on size versus age can yield opposite welfare effects, even when employment effects are similar, and that fixed-term contract and firing restrictions must be evaluated jointly. |
| Keywords: | employment protection legislation, general-equilibrium spillovers, fixed-term contracts, contingent regulation, directed search, structural estimation |
| JEL: | E24 D58 J41 J63 J68 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18909 |
| By: | Benjamin Goldman; Jamie Gracie; Sonya Porter |
| Abstract: | Children from low-income families face barriers outside the classroom that impede learning and limit opportunities for economic mobility. We study Communities In Schools (CIS), a program that places coordinators in high-poverty schools to connect struggling students with personalized support. Coordinators match students to resources that address academic, behavioral, and basic needs—such as tutoring, mental health counseling, and housing stabilization. CIS is the largest program of its kind in the U.S., reaching 2 million students annually. Using the staggered rollout of CIS, we find that the program boosts test scores for struggling students. These gains persist, raising high school completion and adult earnings. Improvements in test scores explain only about half of CIS's impact on high school graduation; the remainder reflects progress on non-cognitive outcomes such as attendance and behavior. Consistent with CIS's emphasis on personalization, coordinators tailor services to distinct student needs, yet students with different needs experience comparable long-run gains. Placing a trusted adult in schools, backed by a network of programs and services, may offer a scalable way to improve economic mobility. |
| JEL: | H52 I21 I24 I38 J24 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35740 |