nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2005‒10‒22
nine papers chosen by
Maximo Rossi
Universidad de la República

  1. Immigrant Earnings: A Longitudinal Analysis By Barry R. Chiswick; Yew Liang Lee; Paul W. Miller
  2. Computer Skills, Destination Language Proficiency and the Earnings of Natives and Immigrants By Barry R. Chiswick; Paul W. Miller
  3. Work and Family: Marriage, Children, Child Gender and the Work Hours and Earnings of West German Men By Hyung-Jai Choi; Jutta M. Joesch; Shelly Lundberg
  4. Educational Qualifications and Wage Inequality: Evidence for Europe By Santiago Budría; Pedro Telhado Pereira
  5. Gender Discrimination Estimation in a Search Model with Matching and Bargaining By Luca Flabbi
  6. More on Unemployment and Vacancy Fluctuations By Dale T. Mortensen; Éva Nagypál
  7. Labor Supply and Child Care Costs: The Effect of Rationing By Daniela Del Boca; Daniela Vuri
  8. Collective Labour Supply: Heterogeneity and Nonparticipation By Richard Blundell; Pierre-André Chiappori; Thierry Magnac; Costas Meghir
  9. Do Temporary Help Jobs Improve Labor Market Outcomes<br>for Low-Skilled Workers? Evidence from Random Assignments By David Autor; Susan Houseman

  1. By: Barry R. Chiswick (University of Illinois at Chicago and IZA Bonn); Yew Liang Lee (University of Western Australia); Paul W. Miller (University of Western Australia and IZA Bonn)
    Abstract: This paper uses the Longitudinal Survey of Immigrants to Australia to analyze the determinants of the level and growth in earnings of adult male immigrants in their first 3.5 years in Australia. The theoretical framework is based on the immigrant adjustment model, which incorporates both the transferability of immigrant skills and selectively in migration. The cross-sectional and longitudinal analyses generate similar findings. The level and relative growth of earnings are higher for immigrants with higher levels of skill and who are economic/skills tested migrants, as distinct from family based and refugee migrants. The analysis indicates that immigrant economic assimilation does occur and that in these data the cross-section provides a good estimate of the longitudinal progress of immigrants. The findings are robust across statistical techniques.
    Keywords: immigrants, wages, longitudinal survey, inertia model, Australia
    JEL: F22 J31 J61
    Date: 2005–09
  2. By: Barry R. Chiswick (University of Illinois at Chicago and IZA Bonn); Paul W. Miller (University of Western Australia and IZA Bonn)
    Abstract: Using data from the 2001 Census of Population and Housing in Australia, this paper investigates the determinants, and consequences for earnings, of computer use by both the native born and the foreign born. Focussing on the foreign born, the multivariate analyses show that recent arrivals are more likely to use computers than the Australian born. As the level of computer use in Australia is much higher than in most of the countries that Australia’s immigrants come from, this evidence suggests a high degree of favorable selection in migration. Study of the links between earnings, computer use and other human capital skills shows that educational attainment and destination language skills are complements to computer use. The use of a computer is shown to be a way the foreign born can increase the international transferability of their pre-immigration skills, a finding that has implications for immigrant settlement policies.
    Keywords: computers, internet, immigrants, language, earnings
    JEL: F22 D13 J15 J24 J31 J61
    Date: 2005–09
  3. By: Hyung-Jai Choi (University of Washington); Jutta M. Joesch (Battelle Centers for Public Health Research and Evaluation); Shelly Lundberg (University of Washington and IZA Bonn)
    Abstract: We find a strong association between family status and labor market outcomes for recent cohorts of West German men in the German Socio-Economic Panel. Living with a partner and living with a child both have substantial positive effects on earnings and work hours. These effects persist in fixed effects models that control for correlation in time-invariant unobservables that affect both family and work outcomes. Child gender also matters - a first son increases fathers' work hours by 100 hours per year more than a first daughter. There is evidence of son "preference" in the probability that a German man is observed to be coresiding with a son or a daughter. Men are more likely to remain in the same household with a male child than a female child and girls are underrepresented in the raw data. Controlling for selective attrition in our labor supply model reveals that men who remain with female children are strongly positively selected (in terms of their work hours) relative to men who remain with male children.
    Keywords: child gender, fatherhood, labor supply, family
    JEL: J22 J12 J13 J16
    Date: 2005–09
  4. By: Santiago Budría (University of Madeira and CEEAplA); Pedro Telhado Pereira (University of Madeira, CEEAplA, CEPR and IZA Bonn)
    Abstract: This paper explores the connection between education and wage inequality in nine European countries. We exploit the quantile regression technique to calculate returns to lower secondary, upper secondary and tertiary education at different points of the wage distribution. We find that returns to tertiary education are highly increasing when moving from the lower to the upper quantiles. This finding suggests that an educational expansion towards tertiary education is expected, ceteris paribus, to increase overall wage inequality through the withindimension. Returns to secondary education are more homogeneous across quantiles, thus suggesting that an educational expansion towards secondary education is expected to have a more limited impact on within-groups dispersion. Using data from the last decades, we assess how the impact of education on wage inequality has evolved over time. We detect different trends across countries. A common feature is that the inequality increasing effect of tertiary education became more acute over the last years.
    Keywords: returns to education, quantile regression, wage inequality
    JEL: C29 D31 I21
    Date: 2005–09
  5. By: Luca Flabbi (Georgetown University and IZA Bonn)
    Abstract: Gender wage differentials, conditional on observed productivity characteristics, have been considered a possible indication of prejudice against women in the labor market. However, there is no conclusive evidence on whether these differentials are due to labor market discrimination or to unobserved productivity differences. The objective of this paper is to propose a solution for this identification problem by developing and estimating a search model of the labor market with matching, bargaining and employers’ taste discrimination. In equilibrium all types of employers wage discriminate women: prejudiced employers because of preference and unprejudiced employers because of spillover effects that worsen the bargaining position of women. Estimation is performed by maximum likelihood on Current Population Survey data for the year 1995. Results indicate that the productivity of women is 6.5% lower than the productivity of men and that about half of the employers are prejudiced against women. Three policy experiments are implemented using the estimated parameters: an equal pay policy, an affirmative action policy and a wage differential decomposition that takes into account equilibrium effects.
    Keywords: gender differentials, discrimination, search models, maximum likelihood estimation, structural estimation, affirmative action
    JEL: C51 J7 J64
    Date: 2005–09
  6. By: Dale T. Mortensen (Northwestern University, NBER and IZA Bonn); Éva Nagypál (Northwestern University)
    Abstract: Shimer (2005a) argues that the Mortensen-Pissarides equilibrium search model of unemployment explains only about 10% of the response in the job-finding rate to an aggregate productivity shock. Some of the recent papers inspired by his critique are reviewed and commented on here. Specifically, we suggest that the sole problem is neither the procyclicality of the wage nor the failure to account fully for the opportunity cost of employment. Although an amended version of the model, one that accounts for capital costs and counter cyclic involuntary separations, does much better, it still explains only 40% of the observed volatility of the job-finding rate. Finally, allowing for on-the-job search does not improve the amended model’s implications for the amplification of productivity shocks.
    Keywords: labor market search, unemployment and vacancies volatility, job-finding rate, productivity shocks
    JEL: E24 E32 J41 J63 J64
    Date: 2005–09
  7. By: Daniela Del Boca (University of Turin, CHILD and IZA Bonn); Daniela Vuri (University of Florence, CHILD and IZA Bonn)
    Abstract: In Italy the participation of women has not increased very much in the last few decades relative to other developed countries and it is still among the lowest in Europe. The female employment rate stands almost 13 percentage points below the EU average and 22 below the Lisbon target. One of the most important reasons is related to the characteristics of child care system. In this paper we analyze the characteristics of the child care system in Italy and its relationship to the labor market participation decision of mothers. We present a simple discrete choice framework in which the two decisions can be jointly considered, which also allows for simple forms of rationing and estimate a bivariate probit model of the child care and employment decisions and interpret the results within the framework of our model. We find evidence that rationing is an important factor in interpreting price effects on utilization rates.
    Keywords: labor market decisions, fertility, child care
    JEL: J2 C3 D1
    Date: 2005–09
  8. By: Richard Blundell (University College London, Institute for Fiscal Studies and IZA Bonn); Pierre-André Chiappori (University of Chicago and Columbia University); Thierry Magnac (GREMAQ-IDEI, Université Toulouse 1 Sciences Sociales and IZA Bonn); Costas Meghir (University College London, Institute for Fiscal Studies and IZA Bonn)
    Abstract: We present identification and estimation results for the "collective" model of labour supply in which there are discrete choices, censoring of hours and nonparticipation in employment. We derive the collective restrictions on labour supply functions and contrast them with restrictions implied by the usual "unitary" framework. Using the large changes in the wage structure between men and women in the UK over the last two decades we estimate a collective labor supply model for married couples without children. The implications of the unitary framework are rejected while those of the collective approach are not. The estimates of the sharing rule show that wages have a strong influence on bargaining power within couples.
    Keywords: collective models, labor supply
    JEL: D11 D12 D13 D70 J22
    Date: 2005–09
  9. By: David Autor (MIT and NBER); Susan Houseman (W.E. Upjohn Institute for Employment Research)
    Abstract: A disproportionate share of low-skilled U.S. workers is employed by temporary help firms. These firms offer rapid entry into paid employment, but temporary help jobs are typically brief and it is unknown whether they foster longer-term employment. We draw upon an unusual, large-scale policy experiment in the state of Michigan to evaluate whether holding temporary help jobs facilitates labor market advancement for low-skilled workers. To identify these effects, we exploit the random assignment of welfare-to-work clients across numerous welfare service providers in a major metropolitan area. These providers feature substantially different placement rates at temporary help jobs but offer otherwise similar services. We find that moving welfare participants into temporary help jobs boosts their short-term earnings. But these gains are offset by lower earnings, less frequent employment, and potentially higher welfare recidivism over the next one to two years. In contrast, placements in direct-hire jobs raise participants' earnings substantially and reduce recidivism both one and two years following placement. We conclude that encouraging low-skilled workers to take temporary help agency jobs is no more effective - and possibly less effective - than providing no job placements at all.
    Keywords: temporary agency, poverty, welfare, welfare-to-work, autor, houseman
    JEL: I38 J20 J30 J40
    Date: 2005–10

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