nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2006‒03‒18
seven papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Workers' Remittances to Former Soviet States By Mechthild Schrooten
  2. Migration and Money - What determines Remittances? Evidence from Germany By Elke Holst; Mechthild Schrooten
  3. Performance Pay and Multi-dimensional Sorting: Productivity, Preferences and Gender By Thomas Dohmen; Armin Falk
  4. Leisure Time in Japan: How Much and for Whom? By Scott M. Fuess, Jr.
  5. Modes of Spousal Interaction and the Labor Market Environment By Daniela Del Boca; Christopher J. Flinn
  6. A Cross-Country Study of Union Membership By David G. Blanchflower
  7. The Effectiveness of European Active Labor Market Policy By Jochen Kluve

  1. By: Mechthild Schrooten
    Abstract: Workers' remittances are an important source of external finance for many former Soviet countries. Nevertheless, the determinants of remittances are only rarely analyzed. Using panel-data estimation techniques the study comes to the following major results: Remittances are highly persistent. They can only be partly explained by income. Furthermore, the performance of the domestic banking sector and the access of the private sector to credit play an important role. Better international integration and a better quality of institutions lead to an increase in remittances.
    Keywords: remittances, migration, economic development, panel data model
    JEL: F22 F36
    Date: 2006–03
  2. By: Elke Holst; Mechthild Schrooten
    Abstract: The determinants of migrants' remittances are the subject of this study based on German SOEP data. For our analysis of the probability and amount of remittances, we do not restrict ourselves on immigrants with a foreign citizenship, but focus on all individuals with a migration background. Major findings are: first, the degree of integration into German society matters. Second, the probability to remit is not dominated by income. Third, foreigners living in Germany are not a homogenous group concerning their remittance behavior: people with Turkish and former Yugoslavian citizenship, who are facing a comparable strong pressure for return migration, remit significantly more than others. The study points to potentially interesting directions for future research: (a) deeper investigations of the extent to which the legal status of the migrant influences cross-border transfer behavior and (b) reconsidering the theoretical arguments since the motive for remittances might have changed during the ongoing globalization process.
    Keywords: remittances, international migration, altruism
    JEL: J61 F22 D64
    Date: 2006–03
  3. By: Thomas Dohmen (IZA Bonn); Armin Falk (IZA Bonn and University of Bonn)
    Abstract: This paper studies the impact of incentives on worker self-selection in a controlled laboratory experiment. In a first step we elicit subjects’ productivity levels. Subjects then face the choice between a fixed or a variable payment scheme. Depending on the treatment, the variable payment is either a piece rate, a tournament or a revenue-sharing scheme. We elicit additional individual characteristics such as subjects’ risk attitudes, measures of selfassessment and overconfidence, social preferences, gender and personality. We also elicit self-reported measures of work effort, stress and exhaustion. Our main findings are as follows. First, output is much higher in the variable pay schemes (piece rate, tournament, and revenue sharing) compared to the fixed payment scheme. Second, this difference is largely driven by productivity sorting. On average, the more productive a worker is, the more likely he self-selects into the variable pay scheme. Third, relative self-assessment and overconfidence affect worker self-selection, in particular into tournaments. Fourth, risk averse workers prefer fixed payments and are less likely to sort into variable pay schemes. Fifth, people endowed with social preferences are less likely to sort into tournaments. Sixth, variable pay schemes attract men more than women, a difference that is partly explained by gender-specific risk attitudes. Seventh, self-selection is also affected by personality differences. Finally, reported effort is significantly higher in all variable pay conditions than in the fixed wage condition. In sum, our findings underline the importance of multi-dimensional sorting, i.e., the tendency for different incentive schemes to systematically attract people with different abilities, preferences, self-assessments, gender and personalities.
    Keywords: personnel economics, sorting, incentives, productivity, ability, piece rates, tournament, revenue sharing, risk preferences, overconfidence, gender, experiment
    JEL: M52 M55 J00 J3 J33 J31 J16 J22 J24 C91 D81
    Date: 2006–03
  4. By: Scott M. Fuess, Jr. (University of Nebraska-Lincoln and IZA Bonn)
    Abstract: Japan is famous for long working hours. For decades the Japanese government has tried to influence how people spend their free time. In 5-yearly surveys since 1986, the government has surveyed "quality of life" by gauging how much time people spend daily in various "noneconomic" activities. Using results from the 1986, 1991, 1996, and 2001 surveys, this study determines whether time spent daily on leisure activities has actually changed. Controlling for labor market forces, in recent years Japanese adults have not experienced more leisure time overall. They have increased time spent, one hour per week, in media-oriented leisure; this increase, however, comes at the expense of more outgoing amusements like hobbies, playing sports, or socializing with friends. There is a significant gender gap for leisure time. Shorter work schedules do encourage a more active leisure lifestyle. Leisure is directly related to regular income, but is stifled by bonus pay.
    Keywords: time allocation, leisure time and working hours, country studies, Japan
    JEL: J20 J22 J40
    Date: 2006–03
  5. By: Daniela Del Boca (University of Turin and IZA Bonn); Christopher J. Flinn (New York University and IZA Bonn)
    Abstract: We formulate a model of household behavior in which cooperation is costly and in which these costs vary across households. Some households rationally decide to behave noncooperatively, which in our context is an efficient outcome. An intriguing feature of the model is that, while the welfare of the spouses is continuous in the state variables, labor supply decisions are not. Small changes in state variables may result in large changes in labor supplies when the household switches its mode of behavior. We estimate the model using a nationally representative sample of Italian households and find that the costly cooperation model significantly outperforms a noncooperative model. This suggests the possibility of attaining large gains in aggregate labor supply by adopting policies which promote cooperative household behavior.
    Keywords: household time allocation, Nash bargaining, Nash equilibrium, maximum likelihood
    JEL: C79 D19 J22
    Date: 2006–03
  6. By: David G. Blanchflower (Dartmouth College, NBER and IZA Bonn)
    Abstract: This paper examines changes in unionization that have occurred over the last decade or so using individual level micro data on twenty seven of the thirty OECD countries, with particular emphasis on Canada, the United Kingdom and the United States. Micro-data is also used to model union membership in a further eleven non-OECD countries. Union density is found to be negatively correlated with level of education in the private sector and positively correlated in the public sector. The probability of being a union member is found to follow an inverted U-shaped pattern in age, maximizing in Canada, the USA and the UK in the mid to late 40s. This inverted U-shaped pattern is repeated in a further thirty countries (Australia; Austria; Bangladesh; Belgium; Bulgaria; Chile; Czech Republic; Denmark; Germany; Estonia; Finland; France; Greece; Hungary; Ireland; Israel; Japan; Luxembourg; Mexico; Netherlands; New Zealand; Norway; Poland; Portugal; Russia; Slovak Republic; Slovenia; Spain; Sweden and Switzerland). I consider the question of why this inverted U-shape in age exists across countries with diverse industrial relations systems including early retirement and cohort effects.
    Keywords: unions membership, OECD, non-OECD
    JEL: J3
    Date: 2006–03
  7. By: Jochen Kluve (RWI Essen and IZA Bonn)
    Abstract: Measures of Active Labor Market Policy are widely used in European countries, but despite many econometric evaluation studies no conclusive cross-country evidence exists regarding "what program works for what target group under what (economic and institutional) circumstances?". This paper results from an extensive research project for the European Commission aimed at answering that question using a meta-analytical framework. The empirical results are surprisingly clear-cut: Rather than contextual factors such as labor market institutions or the business cycle, it is almost exclusively the program type that matters for program effectiveness. While direct employment programs in the public sector appear detrimental, wage subsidies and "Services and Sanctions" can be effective in increasing participants' employment probability.
    Keywords: Active Labor Market Policy, program evaluation, meta analysis
    JEL: J00 J68
    Date: 2006–03

This nep-ltv issue is ©2006 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.