nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2008‒06‒07
six papers chosen by
Maximo Rossi
University of the Republic

  1. Labor Market Institutions Around the World By Richard Freeman
  2. Employment Outcomes in the Welfare State By Rachel Ngai; Christopher A. Pissarides
  3. Union Density and Varieties of Coverage: The Anatomy of Union Wage Effects in Germany By Bernd Fitzenberger; Karsten Kohn; Alexander C. Lembcke
  4. Union Decline in Britain By D Blanchflower; Alex Bryson
  5. Early Labour Market Returns to College Subjects By Buonanno, Paolo; Pozzoli, Dario
  6. Does Your Cohort Matter? Measuring Peer Effects in College Achievement By Scott E. Carrell; Richard L. Fullerton; James E. West

  1. By: Richard Freeman
    Abstract: This paper documents the large cross-country differences in labor institutions that make thema candidate explanatory factor for the divergent economic performance of countries andreviews what economists have learned about the effects of these institutions on economicoutcomes. It identifies three ways in which institutions affect economic performance: byaltering incentives, by facilitating efficient bargaining, and by increasing information,communication, and trust. The evidence shows that labor institutions reduce the dispersion ofearnings and income inequality, which alters incentives, but finds equivocal effects on otheraggregate outcomes, such as employment and unemployment. Given weaknesses in the crosscountrydata on which most studies focus, the paper argues for increased use of micro-data,simulations, and experiments to illuminate how labor institutions operate and affectoutcomes.
    Keywords: labour market, unemployment
    JEL: J01
    Date: 2008–01
  2. By: Rachel Ngai; Christopher A. Pissarides
    Abstract: We examine the implications of tax and subsidy policies for employment in the "three worlds of welfare", Anglo-Saxon, Continental European and Scandinavian. We argue that home production is key to a proper evaluation of the employment outcomes. Anglo-Saxon low-support policies encourage more overall market employment. Continental transfer polilcies encourage more home production in services with close substitutes at home. Scandinavian policies give incentives to move home production in social services to the market but discourage other service activity. We find support for our claims in sectoral employment data for five representative countries, United States, Britain, France, Italy and Sweden.
    Keywords: welfare state, employment, social services, tax and subsidy, three worlds of welfare
    JEL: E24 I38 J22
    Date: 2008–02
  3. By: Bernd Fitzenberger; Karsten Kohn; Alexander C. Lembcke
    Abstract: Collective bargaining in Germany takes place either at the industry level or at the firm level; collective bargaining coverage is much higher than union density; and not all employees in a covered firm are necessarily covered. This institutional setup suggests to distinguish explicitly union power as measured by net union density (NUD) in a labor market segment, coverage at the firm level, and coverage at the individual level. Using linked employer-employee data and applying quantile regressions, this is the first empirical paper which simultaneously analyzes these three dimensions of union influence on the structure of wages. Ceteris paribus, a higher share of employees in a firm covered by industry-wide or firm-level contracts is associated with higher wages. Yet, individual bargaining coverage in a covered firm shows a negative impact both on the wage level and on wage dispersion. A higher union density reinforces the effects of coverage, but the effect of union density is negative at all points in the wage distribution for uncovered employees. In line with an insurance motive, higher union density compresses the wage structure and, at the same time, it is associated with a uniform leftward movement of the distribution for uncovered employees.
    Keywords: union density, collective bargaining coverage, wage structure, quantile regression, linked employer-employee data, Structure of Earnings Survey 2001, Germany
    JEL: J31 J51 J52
    Date: 2008–03
  4. By: D Blanchflower; Alex Bryson
    Abstract: This paper investigates the demise of unionisation in British private sectorworkplaces over the last quarter century. We show that dramatic union decline hasoccurred across all types of workplace. Although the union wage premium persistsit is quite small in 2004. Negative union effects on employment growth andfinancial performance are largely confined to the 1980s. Managerial perceptions ofthe climate of relations between managers and workers has deteriorated since theearly 1980s across the whole private sector, whether the workplace is unionised ornot.
    Keywords: trade unions, employment growth, financial performance, industrialrelations
    JEL: J51
    Date: 2008–04
  5. By: Buonanno, Paolo (Dipartimento di Scienze Economiche); Pozzoli, Dario (Department of Economics, Aarhus School of Business)
    Abstract: This paper aims at estimating early labour market outcomes of Italian university graduates across college subjects. We devote great attention to endogenous selection issues using alternative methods to control for potential self-selection associated with the choice of the degree subject in order to unravel the causal link between college major and subsequent outcomes in the labour market. Our results suggest that “quantitative” fields (i.e. Sciences, Engineering and Economics) increase not only the speed of transition into the first job and employment probability but also early earnings, conditional on employment.
    Keywords: University to work transition; College subject; Self-selection; Returns to education
    JEL: C34 I21 J24
    Date: 2008–05–01
  6. By: Scott E. Carrell; Richard L. Fullerton; James E. West
    Abstract: To estimate peer effects in college achievement we exploit a unique dataset in which individuals have been exogenously assigned to peer groups of about 30 students with whom they are required to spend the majority of their time interacting. This feature enables us to estimate peer effects that are more comparable to changing the entire cohort of peers. Using this broad peer group, we find academic peer effects of much larger magnitude than found in previous studies that have measured peer effects among roommates alone. We find the peer effects persist at a diminishing rate into the sophomore, junior, and senior years, indicating social network peer effects may have long lasting effects on academic achievement. Our findings also suggest that peer effects may be working through study partnerships versus operating through establishment of a social norm of effort.
    JEL: I20
    Date: 2008–05

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