nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2020‒11‒16
two papers chosen by
Maximo Rossi
Universidad de la República

  1. Motherhood, Labor Market Trajectories, and the Allocation of Talent: Harmonized Evidence on 29 Countries By Inés Berniell; Lucila Berniell; Dolores de la Mata; María Edo; Yarine Fawaz; Matilde P. Machado; Mariana Marchionni
  2. Risk Preferences and Training Investments By Marco Caliendo; Deborah A. Cobb-Clark; Cosima Obst; Arne Uhlendorff

  1. By: Inés Berniell (CEDLAS-IIE-FCE-UNLP); Lucila Berniell (CAF); Dolores de la Mata (CAF); María Edo (Universidad de San Andrés); Yarine Fawaz (CEMFI); Matilde P. Machado (Universidad Carlos III de Madrid); Mariana Marchionni (CEDLAS-IIE-FCE-UNLP and CONICET)
    Abstract: In this paper we assess whether changes in labor market decisions upon motherhood lead to potential inefficient allocations of talent. Using an event study approach with retrospective data drawn from SHARE for 29 European countries we show that motherhood effects go beyond the well studied effects of labor market participation decisions: the arrival of the first child substantially affects the uptaking of alternative modes of employment, such as part-time and self-employment, that are characterized by flexible or reduced work schedules but also lower pay on average. We also show that the size of labor market responses to motherhood are larger in societies with more conservative social-norms or with weak policies regarding work-life balance. To assess the effects of motherhood over the allocation of talent, we explore how labor market responses to parenthood vary by alternative measures of talent or ability. We find that all women, even those with the highest level of ability and abler than their husbands face large motherhood effects, while men show virtually no changes in the labor market when becoming fathers. We also find that mothers who become self-employed after the birth of the first child are those that are less entrepreneurial-able according to cognitive ability and personality traits shown to impair business survival. Overall, our results suggest relevant changes in the allocation of talent caused by gender differences in nonmarket responsibilities that can have sizable impacts on aggregate market productivity.
    JEL: J13 J16 J24
    Date: 2020–11
  2. By: Marco Caliendo (University of Potsdam, IZA Bonn, DIW Berlin, IAB Nuremberg); Deborah A. Cobb-Clark (UUniversity of Sydney, IZA, ARC Centre of Excellence for Families and Children Over the Life Course); Cosima Obst (University of Potsdam); Arne Uhlendorff (CREST, CNRS, IP Paris, IAB, IZA, DIW)
    Abstract: We analyze workers’ risk preferences and training investments. Our conceptual framework differentiates between the investment risk and insurance mechanisms underpinning training decisions. Investment risk leads risk-averse workers to train less; they undertake more training if it insures them against future losses. We use the German Socio-Economic Panel (SOEP) to demonstrate that risk affinity is associated with more training, implying that, on average, investment risks dominate the insurance benefits of training. Crucially, this relationship is evident only for general training; there is no relationship between risk attitudes and specific training. Thus, as expected, risk preferences matter more when skills are transferable – and workers have a vested interest in training outcomes – than when they are not. Finally, we provide evidence that the insurance benefits of training are concentrated among workers with uncertain employment relationships or limited access to public insurance schemes.
    Keywords: Human Capital Investment, Work-related Training, Risk Preferences
    JEL: J24 C23 D81
    Date: 2020–11

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