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on Labour Economics |
| By: | Knoppik, Christoph (University of Regensburg); Beissinger, Thomas (University of Kaiserslautern, University of Regensburg and IZA Bonn) |
| Abstract: | This paper substantially extends the limited available evidence on existence and extent of downward nominal wage rigidity in the European Union and the Euro Area. For this purpose we develop an econometric multi-country model based on Kahn’s (1997) histogram-location approach and apply it to employee micro data from the European Community Household Panel (ECHP) for twelve of the EU’s current member states. Our estimates for the degree of downward nominal wage rigidity on the national as well as the EU-wide level point to marked downward nominal wage rigidity within the European Union. |
| Keywords: | downward nominal wage rigidity, wage stickiness, European Community Household Panel, ECHP, histogram-location approach; European Union, Euro area |
| JEL: | J30 E24 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1492&r=lab |
| By: | Borghans, Lex (ROA, Maastricht University and IZA Bonn); ter Weel, Bas (MERIT, Maastricht University and IZA Bonn); Weinberg, Bruce A. (Ohio State University and IZA Bonn) |
| Abstract: | Despite indications that interpersonal interactions are important for understanding individual labor-market outcomes and have become more important over the last decades, there is little analysis by economists. This paper shows that interpersonal interactions are important determinants of labor-market outcomes, including occupations and wages. We show that technological and organizational changes have increased the importance of interpersonal interactions in the workplace. We particularly focus on how the increased importance of interpersonal interactions has affected the labor-market outcomes of underrepresented groups. We show that the acceleration in the rate of increase in the importance of interpersonal interactions between the late 1970s and early 1990s can help explain why women’s wages increased more rapidly, while the wages of blacks grew more slowly over these years relative to earlier years. |
| Keywords: | interpersonal interactions, wage level and structure, economics of minorities and races and gender, social capital |
| JEL: | J16 J21 J24 J31 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1494&r=lab |
| By: | Chevalier, Arnaud (University of Kent, London School of Economics and IZA Bonn); Harmon, Colm (University College Dublin, CEPR and IZA Bonn); O’Sullivan, Vincent (University College London); Walker, Ian (University of Warwick, Institute of Fiscal Studies and IZA Bonn) |
| Abstract: | This paper addresses the intergeneration transmission of education and investigates the extent to which early school leaving (at age 16) may be due to variations in permanent income, parental education levels, and shocks to income at this age. Least squares estimation reveals conventional results - stronger effects of maternal education than paternal, and stronger effects on sons than daughters. We find that the education effects remain significant even when household income is included. Moreover, decomposing the income when the child is 16 between a permanent component and shocks to income at age 16 only the latter is significant. It would appear that education is an important input even when we control for permanent income but that credit constraints at age 16 are also influential. However, when we use instrumental variable methods to simultaneously account for the endogeneity of parental education and paternal income, we find that the strong effects of parental education become insignificant and permanent income matters much more, while the effects of shocks to household income at 16 remain important. A similar pattern of results are reflected in the main measure of scholastic achievement at age 16. These findings have important implications for the design of policies aimed at encouraging pupils to remain in school longer. |
| Keywords: | early school leaving, intergenerational transmission |
| JEL: | I20 J62 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1496&r=lab |
| By: | Bryson, Alex (Policy Studies Institute and CEP); Cappellari, Lorenzo (Catholic University of Milan, CESifo and IZA Bonn); Lucifora, Claudio (Catholic University of Milan and IZA Bonn) |
| Abstract: | We use linked employer-employee data to investigate the job satisfaction effect of unionisation in Britain. We depart from previous studies by developing a model that simultaneously controls for the endogeneity of union membership and union recognition. We show that a negative association between membership and satisfaction only emerges where there is a union recognised for bargaining, and that such an effect vanishes when the simultaneous selection into membership and recognition is taken into account. We also show that ignoring endogenous recognition would lead to conclude that membership has a positive effect on satisfaction. Our estimates indicate that the unobserved factors that lead to sorting across workplaces are negatively related to the ones determining membership and positively related with those generating satisfaction, a result that we interpret as being consistent with the existence of queues for union jobs. |
| Keywords: | job satisfaction, union membership, union recognition, endogeneity |
| JEL: | J28 J51 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1498&r=lab |
| By: | Angrist, Joshua D. (MIT, NBER and IZA Bonn); Guryan, Jonathan (University of Chicago and NBER) |
| Abstract: | The education reform movement includes efforts to raise teacher quality through stricter certification and licensing provisions. Most US states now require public school teachers to pass a standardized test such as the Praxis. Although any barrier to entry is likely to raise wages in the affected occupation, the theoretical effects of such requirements on teacher quality are ambiguous. Teacher testing places a floor on whatever skills are measured by the required test, but testing is also costly for applicants. These costs shift teacher supply to the left and may be especially likely to deter high-quality applicants from teaching in public schools. Moreover, test requirements may disqualify some applicants that schools would otherwise want to hire. We use the Schools and Staffing Survey to estimate the effect of state teacher testing requirements on teacher wages and teacher quality as measured by educational background. The results suggest that state-mandated teacher testing increases teacher wages with no corresponding increase in quality. |
| Keywords: | occupational licensure, education reform, worker screening |
| JEL: | I28 J44 J45 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1500&r=lab |
| By: | O'Leary, Nigel (University of Wales Swansea); Murphy, Philip D. (University of Wales Swansea); Latreille, Paul (University of Wales Swansea); Blackaby, David H. (University of Wales Swansea); Sloane, Peter J. (University of Wales Swansea and IZA Bonn) |
| Abstract: | Regional unemployment rates in Great Britain have narrowed dramatically in recent years. However, significant differences still remain in terms of both employment and economic inactivity rates, which may now better reflect relative labour market performance. This paper examines these differences in labour market outcomes using a unified empirical framework that decomposes regional differences in employment, economic inactivity and unemployment into components due to either structural or composition effects. The analysis highlights the important role that ill health and structural deficits currently play in accounting for regional differences in both employment and economic inactivity rates. |
| Keywords: | regions, employment, unemployment, inactivity |
| JEL: | J21 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1501&r=lab |
| By: | Eric A. Hanushek; John F. Kain; Daniel M. O'Brien; Steven G. Rivkin |
| Abstract: | Much of education policy focuses on improving teacher quality, but most policies lack strong research support. We use student achievement gains to estimate teacher value-added, our measure of teacher quality. The analysis reveals substantial variation in the quality of instruction, most of which occurs within rather than between schools. Although teacher quality appears to be unrelated to advanced degrees or certification, experience does matter -- but only in the first year of teaching. We also find that good teachers tend to be effective with all student ability levels but that there is a positive value of matching students and teachers by race. In the second part of the analysis, we show that teachers staying in our sample of urban schools tend to be as good as or better than those who exit. Thus, the main cost of large turnover is the introduction of more first year teachers. Finally, there is little or no evidence that districts that offer higher salaries and have better working conditions attract the higher quality teachers among those who depart the central city district. The overall results have a variety of direct policy implications for the design of school accountability and the compensation of teachers. |
| JEL: | I2 J4 H4 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11154&r=lab |
| By: | Chinhui Juhn (Department of Economics, University of Houston); Aimee Chin (Department of Economics, University of Houston); Peter Thompson (Department of Economics, Florida International University) |
| Abstract: | Using a large, individual-level wage data set, we examine the impact of a major technological innovation—the steam engine—on skill demand and the wage structure in the merchant shipping industry. We find that the technical change created a new demand for skilled workers, the engineers, while destroying demand for workers with skills relevant only to sail. It had a deskilling effect on production work—able-bodied seamen (essentially, artisans) were replaced by unskilled engine room operatives. On the other hand, mates and able-bodied seamen employed on steam earned a premium relative to their counterparts on sail. A wholesale switch from sail to steam would increase the 90/10 wage ratio by 40%, with most of the rise in inequality coming from the creation of the engineer occupation. |
| JEL: | I20 J24 J31 |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:hou:wpaper:2004-03&r=lab |
| By: | Sebnem Kalemli-Ozcan (Department of Economics, University of Houston); David N. Weil |
| Abstract: | We examine the role of declining mortality in explaining the rise of retirement over the course of the 20th century. We construct a model in which individuals make labor/leisure choices over their lifetimes subject to uncertainty about their date of death. In an environment in which mortality is high, an individual who saved up for retirement would face a high risk of dying before he could enjoy his planned leisure. In this case, the optimal plan is for people to work until they die. As mortality falls, however, it becomes optimal to plan, and save for, retirement. We simulate our model using actual changes in the US life table over the last century, and show that this “uncertainty effect” of declining mortality would have more than outweighed the “horizon effect” by which rising life expectancy would have led to later retirement. A calibration exercise, allowing for heterogeneity in tastes and other non-mortality factors influencing retirement, shows that falling mortality plausibly had a quantitatively significant effect on retirement. |
| JEL: | E21 I12 J11 J26 |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:hou:wpaper:2004-04&r=lab |