nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2019‒12‒02
three papers chosen by
Maximo Rossi
Universidad de la República

  1. Improving Employment and Earnings in 21st Century Labor Markets: An Introduction By Groshen, Erica L.; Holzer, Harry J.
  2. Do Start-Up Subsidies for the Unemployed Affect Participants' Well-Being? A Rigorous Look at (Un-)Intended Consequences of Labor Market Policies By Caliendo, Marco; Tübbicke, Stefan
  3. Labor Market Frictions and Lowest Low Fertility By Guner, Nezih; Kaya, Ezgi; Sánchez Marcos, Virginia

  1. By: Groshen, Erica L. (Cornell University); Holzer, Harry J. (Georgetown University)
    Abstract: What are the prospects for improving the lot of US workers in the 21st century? This introduction to the topic examines the most important US labor market trends of the late 20th and early 21st centuries, considers their causes and likely future trends; and then explores policies that might improve these outcomes. The most important broad labor market trends in recent decades have been: 1) Modest real wage growth; 2) Rising earnings inequality; and 3) Declining labor force participation, recently among both men and women, but especially among less-educated or African-American men and low-income youth over several decades. Key causes of these trends include labor demand and supply factors (such as automation, immigration, and limited college attainment); changing labor market institutions (such as declining unionism and stagnant federal wage/hours laws); rising alternative staffing arrangements, informal work and "fissuring"; and uneven labor market progress and policies affecting women, African-Americans and the young. After that review, we summarize what the papers in our volume tell us about the public policies that could help improve outcomes for US workers. The main message is that further deterioration in many US workers' lives in the 21st century likely requires public and employer policy changes to help to translate the forces at work into better outcomes for them.
    Keywords: employment, earnings, inequality, labor force
    JEL: J01 J08 J2 J5
    Date: 2019–11
  2. By: Caliendo, Marco (University of Potsdam); Tübbicke, Stefan (University of Potsdam)
    Abstract: We estimate the long-term effects of start-up subsidies (SUS) for the unemployed on subjective outcome indicators of well-being, as measured by the participants' satisfaction in different domains. This extends previous analyses of the current German SUS program ("Gründungszuschuss") that focused on objective outcomes – such as employment and income – and allows us to make a more complete judgment about the overall effects of SUS at the individual level. This is especially important because subsidizing the transition into self-employment may have unintended adverse effects on participants' well-being due to its risky nature and lower social security protection, especially in the long run. Having access to linked administrative-survey data providing us with rich information on pre-treatment characteristics, we base our analysis on the conditional independence assumption and use propensity score matching to estimate causal effects within the potential outcomes framework. We find long-term positive effects on job satisfaction but negative effects on individuals' satisfaction with their social security situation. Further findings suggest that the negative effect on satisfaction with social security may be driven by negative effects on unemployment and retirement insurance coverage. Our heterogeneity analysis reveals substantial variation in effects across gender, age groups and skill levels. The sensitivity analyses show that these findings are highly robust.
    Keywords: start-up subsidies, propensity score matching, counterfactual analysis, well-being
    JEL: C14 L26 H43 I31 J68
    Date: 2019–11
  3. By: Guner, Nezih (CEMFI, Madrid); Kaya, Ezgi (Cardiff University); Sánchez Marcos, Virginia (Universidad de Cantabria)
    Abstract: The total fertility rate is well below its replacement level of 2.1 children in high- income countries. Why do women choose such low fertility levels? We study how labor market frictions affect the fertility of college-educated women. We focus on two frictions: uncertainty created by dual labor markets (the coexistence of jobs with temporary and open-ended contracts) and inflexibility of work schedules. Using rich administrative data from the Spanish Social Security records, we show that women are less likely to be promoted to permanent jobs than men. Temporary contracts are also associated with a lower probability of first birth. With Time Use data, we also show that women with children are less likely to work in jobs with split-shift schedules, which come with a fixed time cost. We then build a life-cycle model in which married women decide whether to work or not, how many children to have, and when to have them. In the model, women face a trade-off between having children early and waiting and building their careers. We show that reforms that reduce the labor market duality and eliminate split-shift schedules increase the completed fertility of college-educated from 1.52 to 1.88. These reforms enable women to have more children and have them early in their life-cycle. They also increase the labor force participation of women and eliminate the employment gap between mothers and non-mothers.
    Keywords: fertility, labor market frictions, temporary contracts, split-shift schedules
    JEL: E24 J13 J21 J22
    Date: 2019–11

This nep-ltv issue is ©2019 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.