nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2021‒02‒22
six papers chosen by
Maximo Rossi
Universidad de la República

  1. How Much Should we Trust Estimates of Firm Effects and Worker Sorting? By Stéphane Bonhomme; Kerstin Holzheu; Thibaut Lamadon; Elena Manresa; Magne Mogstad; Bradley Setzler
  2. The Value of Time in the United States: Estimates from Nationwide Natural Field Experiments By Ariel Goldszmidt; John A. List; Robert D. Metcalfe; Ian Muir; V. Kerry Smith; Jenny Wang
  3. Apart but Connected: Online Tutoring and Student Outcomes during the COVID-19 Pandemic By Carlana, Michela; La Ferrara, Eliana
  4. Worker well-being before and during the COVID-19 restrictions: A longitudinal study in the UK By Diane Pelly; Michael Daly; Liam Delaney; Orla Doyle
  5. Life Satisfaction, Pro-Activity, and Employment By Akay, Alpaslan; Karabulut, Gökhan; Yilmaz, Levent
  6. Do Employees Benefit from Worker Representation on Corporate Boards? By Christine Blandhol; Magne Mogstad; Peter Nilsson; Ola L. Vestad

  1. By: Stéphane Bonhomme (University of Chicago - Department of Economics); Kerstin Holzheu (Sciences Po); Thibaut Lamadon (University of Chicago - Department of Economics; NBER; IFAU; IFS); Elena Manresa (New York University - Department of Economics); Magne Mogstad (University of Chicago - Department of Economics; Statistics Norway; NBER; IFS); Bradley Setzler (University of Chicago - Department of Economics)
    Abstract: Many studies use matched employer-employee data to estimate a statistical model of earnings determination where log-earnings are expressed as the sum of worker effects, firm effects, covariates, and idiosyncratic error terms. Estimates based on this model have produced two influential yet controversial conclusions. First, firm effects typically explain around 20% of the variance of log-earnings, pointing to the importance of firm-specific wage-setting for earnings inequality. Second, the correlation between firm and worker effects is often small and sometimes negative, indicating little if any sorting of high-wage workers to high-paying firms. The objective of this paper is to assess the sensitivity of these conclusions to the biases that arise because of limited mobility of workers across firms. We use employer-employee data from the US and several European countries while taking advantage of both fixed-effects and random-effects methods for bias-correction. We find that limited mobility bias is severe and that bias-correction is important. Once one corrects for limited mobility bias, firm effects dispersion matters less for earnings inequality and worker sorting becomes always positive and typically strong.
    Keywords: Earnings inequality, firm effects, worker sorting, bias correction, fixed effects, random effects, matched employer employee data
    JEL: J31 J62 C23
    Date: 2020
  2. By: Ariel Goldszmidt (Lyft); John A. List (University of Chicago - Department of Economics; NBER); Robert D. Metcalfe (Boston University - Questrom School of Business; NBER); Ian Muir (Lyft); V. Kerry Smith (Arizona State University - W.P. Carey School of Business; NBER); Jenny Wang (Lyft)
    Abstract: The value of time determines relative prices of goods and services, investments, productivity, economic growth, and measurements of income inequality. Economists in the 1960s began to focus on the value of non-work time, pioneering a deep literature exploring the optimal allocation and value of time. By leveraging key features of these classic time allocation theories, we use a novel approach to estimate the value of time (VOT) via two large-scale natural field experiments with the ridesharing company Lyft. We use random variation in both wait times and prices to estimate a consumer's VOT with a data set of more than 14 million observations across consumers in U.S. cities. We find that the VOT is roughly $19 per hour (or 75% (100%) of the after-tax mean (median) wage rate) and varies predictably with choice circumstances correlated with the opportunity cost of wait time. Our VOT estimate is larger than what is currently used by the U.S. Government, suggesting that society is under-valuing time improvements and subsequently under-investing public resources in time-saving infrastructure projects and technologies.
    JEL: D0 D1 R4
    Date: 2020
  3. By: Carlana, Michela (Harvard Kennedy School); La Ferrara, Eliana (Bocconi University)
    Abstract: In response to the COVID-19 outbreak, the governments of most countries ordered the closure of schools, potentially exacerbating existing learning gaps. This paper evaluates the effectiveness of an intervention implemented in Italian middle schools that provides free individual tutoring online to disadvantaged students during lock-down. Tutors are university students who volunteer for 3 to 6 hours per week. They were randomly assigned to middle school students, from a list of potential beneficiaries compiled by school principals. Using original survey data collected from students, parents, teachers and tutors, we find that the program substantially increased students' academic performance (by 0.26 SD on average) and that it significantly improved their socio-emotional skills, aspirations, and psychological well-being. Effects are stronger for children from lower socioeconomic status and, in the case of psychological well-being, for immigrant children.
    Keywords: tutoring, COVID-19, education, achievement, aspirations, socioemotional skills, well-being
    JEL: I24 I21
    Date: 2021–02
  4. By: Diane Pelly (School of Economics, University College Dublin); Michael Daly (Department of Psychology, Maynooth University); Liam Delaney (Behavioural Science Unit, London School of Economics); Orla Doyle (School of Economics, University College Dublin)
    Abstract: The potential impact of COVID-19 restrictions on worker well-being is currently unknown. In this study we examine 15 well-being outcomes collected from 621 full-time workers assessed before (November, 2019 - February, 2020) and during (May-June, 2020) the COVID-19 pandemic. Fixed effects analyses are used to investigate how the COVID-19 restrictions and involuntary homeworking affect well-being and job performance. The majority of worker well-being measures are not adversely affected. Homeworkers feel more engaged and autonomous, experience fewer negative emotions and feel more connected to their organisations. However, these improvements come at the expense of reduced homelife satisfaction and job performance.
    Keywords: COVID-19 restrictions, workers, homeworking, subjective well-being, productivity, mental health, job satisfaction, engagement
    JEL: J08 J24 I31
    Date: 2021–01–01
  5. By: Akay, Alpaslan (University of Gothenburg); Karabulut, Gökhan (Istanbul University); Yilmaz, Levent (Turkish-German University)
    Abstract: Using longitudinal data from the German Socio-Economic Panel (GSOEP), this paper investigates how pro-active time-use (e.g., in sports/arts/socializing) relates to subjective well-being of the unemployed and their probability of finding a new job. Allowing for a variety of socio-demographic and -economic observed characteristics, we find that pro-activity is negatively associated with the well-being loss upon unemployment. That is, the negative unemployment shock on their well-being is mitigated through various stress-reducing activities including, in particular, art participation, socializing, going on trips, and visiting a church. We also find that the probability of returning to the labor market later is positively associated with proactivity during the unemployment period. The results are robust to various checks including estimators, measures, and individual personality characteristics which can correlate with time-use activities.
    Keywords: life satisfaction, pro-activity, employment, labor markets
    JEL: I31 J64 J69
    Date: 2021–02
  6. By: Christine Blandhol (Princeton University - Department of Economics); Magne Mogstad (University of Chicago - Department of Economics; Statistics Norway; IFS; NBER); Peter Nilsson (Stockholm University - Institute for International Economic Studies); Ola L. Vestad (Statistics Norway - Research Department)
    Abstract: Do employees benefit from worker representation on corporate boards? Economists and policymakers are keenly interested in this question – especially lately, as worker representation is widely promoted as an important way to ensure the interests and views of the workers. To investigate this question, we apply a variety of research designs to administrative data from Norway. We find that a worker is paid more and faces less earnings risk if she gets a job in a firm with worker representation on the corporate board. However, these gains in wages and declines in earnings risk are not caused by worker representation per se. Instead, the wage premium and reduced earnings risk reflect that firms with worker representation are likely to be larger and unionized, and that larger and unionized firms tend to both pay a premium and provide better insurance to workers against fluctuations in firm performance. Conditional on the firm’s size and unionization rate, worker representation has little if any effect. Taken together, these findings suggest that while workers may indeed benefit from being employed in firms with worker representation, they would not benefit from legislation mandating worker representation on corporate boards.
    Keywords: Worker compensation; worker representation; corporate governance; unions
    JEL: G34 G38 J31 J54 J58
    Date: 2020

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