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on Labour Economics |
| By: | Christian Haefke; Marcus Sonntag; Thijs van Rens |
| Abstract: | Shimer (2005) and Hall (2005) have documented the failure of standard labor market search models to match business cycle fluctuations in employment and unemployment. They argue that it is likely that wages are not adjusted as regularly as suggested by the model, which would explain why employment is more volatile than the model predicts. We explore whether this explanation is consistent with the data. The main insight is that the relevant wage data for the search model are not aggregate wages, but wages of newly hired workers. Our results show that wages for those workers are much more volatile than aggregate wages and respond one-for-one to changes in labor productivity. Thus, we find no evidence for wage rigidity. |
| Keywords: | Wage Rigidity, Search and Matching Model, Business Cycle |
| JEL: | E24 E32 J31 J41 J64 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1047&r=lab |
| By: | Booth, A.L.; Ours, J.C. van (Tilburg University, Center for Economic Research) |
| Abstract: | Using fixed effects ordered logit estimation, we investigate the relationship between part-time work and working hours satisfaction; job satisfaction; and life satisfaction. We account for interdependence within the family using data on partnered men and women from the British Household Panel Survey. We find that men have the highest hours-of-work satisfaction if they work full-time without overtime hours but neither their job satisfaction nor their life satisfaction are affected by how many hours they work. Life satisfaction is influenced only by whether or not they have a job. For women we are confronted with a puzzle. Hours satisfaction and job satisfaction indicate that women prefer part-time jobs irrespective of whether these are small or large. In contrast, female life satisfaction is virtually unaffected by hours of work. Women without children do not care about their hours of work at all, while women with children are significantly happier if they have a job regardless of how many hours it entails. |
| Keywords: | part-time work;happiness;satisfaction;working hours;gender. |
| JEL: | J22 I31 J16 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200769&r=lab |
| By: | Sandén, Klas (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | This essay presents a new theory explaining increased wage inequality. A standard endogenous growth model is augmented with occupational choice of highskill workers. Depending on the occupational choice, high-skill workers earn either a certain or uncertain income. Wage inequality, measured by the average wage of high-skill workers divided by the average wage of low-skill workers, can increase or decrease due to an increased supply of high-skill workers. <p> |
| Keywords: | Distribution; Wages; Cooperatives; Technological Change; Economic Growth |
| JEL: | D33 J31 J54 O32 O41 |
| Date: | 2007–09–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0263&r=lab |
| By: | Sandén, Klas (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | This essay investigates the interaction between demand uncertainty and non-competitive labor markets where firm owners have the option to shut down and relocate. Workers cannot find new jobs instantly and therefore accept wage reductions to avoid unemployment, if firm owners credibly threaten to shut down. The analysis shows that the expected wage rate is a mix of a competitive wage rate and a bargained wage rate and that this lowers the skill premium. Further, the option of firms to shut down and relocate increases the average size of firms. The analysis also shows that outsourcing or contracting out is more likely if demand is more uncertain, if market power is smaller, and if the markets for intermediate goods are more competitive. Fragmentation increases the skill premium because it leads to more homogenous firms, with respect to workers’ skills. With more homogenous firms, low-skill workers cannot compensate their inferior productivity in wage bargains with high-skill workers.<p> |
| Keywords: | Distribution; Wages; Outsourcing; Fragmentation; Bargaining |
| JEL: | J24 J31 J41 J52 L23 L24 |
| Date: | 2007–09–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0265&r=lab |
| By: | Giovanni Peri; Chad Sparber |
| Abstract: | Many workers with low levels of educational attainment immigrated to the United States in recent decades. Large inflows of less-educated immigrants would reduce wages paid to comparably-educated native-born workers if the two groups compete for similar jobs. In a simple model exploiting comparative advantage, however, we show that if less-educated foreign and native-born workers specialize in performing complementary tasks, immigration will cause natives to reallocate their task supply, thereby reducing downward wage pressure. Using individual data on the task intensity of occupations across US states from 1960-2000, we then demonstrate that foreign-born workers specialize in occupations that require manual tasks such as cleaning, cooking, and building. Immigration causes natives -- who have a better understanding of local networks, rules, customs, and language -- to pursue jobs requiring interactive tasks such as coordinating, organizing, and communicating. Simulations show that this increased specialization mitigated negative wage consequences of immigration for less-educated native-born workers, especially in states with large immigration flows. |
| JEL: | F22 J31 J61 R13 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13389&r=lab |
| By: | Margarita Sapozhnikov; Robert K. Triest |
| Abstract: | One consequence of demographic change is substantial shifts in the age distribution of the working age population. As the baby boom generation ages, the usual historical pattern of there being a high ratio of younger workers relative to older workers is increasingly being replaced by a pattern of there being roughly equal percentages of workers of different ages. One might expect that the increasing relative supply of older workers would lower the wage premium paid for older, more experienced workers. ; This paper provides strong empirical support for this hypothesis. Econometric estimates imply that the size of one’s birth cohort affects wages throughout one’s working life, with members of relatively large cohorts (at all stages of their careers) earning a significantly lower wage than members of smaller cohorts. The cohort size effect is of approximately the same magnitude for men and for women. Our results suggest that cohort size effects are quantitatively important and should be incorporated into public policy analyses. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:07-8&r=lab |
| By: | Polterovich , Victor (BOFIT) |
| Abstract: | The paper is intended to explain low sensitivity of employment decisions observed in transition economies where insider ownership prevails and capital markets are not highly developed. We introduce a stability concept for employment levels of a labor-managed firm and prove that there exists a segment of stable employment levels. If a level belongs to the interior of the segment then the firm keeps the same labor input level under any not too large changes. By contrast, the wage rate is re-sponsive. Only the firms on the boundaries of the segment may reconsider em-ployment decisions. Deterioration of market conditions entails decreasing labor inputs for firms with much excess labor and, the same time, increases employment for firms with low levels of labor input. This creates inter-firm flows of workforce and restrains the rise of total unemployment. Stability segments exist also for firms where employment-wage decisions are made by bargaining between workers and managers, and may exist for manager-dominated firms as well. Several concepts of labor hoarding are discussed. |
| Keywords: | labor-owned enterprises; transition; Russia |
| Date: | 2007–09–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2000_001&r=lab |
| By: | Christophe Nordman (DIAL, IRD, Paris); François-Charles Wolff (LEN, Université de Nantes, CNAV, INED) |
| Abstract: | (english) In this paper, we consider a model of on-the-job learning where workers learn informally by watching and imitating colleagues. We estimate the rate of knowledge diffusion inside the firm using three matched worker-firm data sets from Benin, Morocco and Senegal. We rely on non-linear least squares to estimate the structural parameters of the informal learning model and account for unobserved firm heterogeneity using firm factors derived from a principal component analysis. We find that the rate of knowledge diffusion is around 7 percent in Morocco and Senegal and much higher in Benin, but part of the learning-bywatching returns stems from firm heterogeneity. Informal training significantly affects the shape of returns to tenure in African countries. Finally, we estimate an extended model with both learning-by-watching and learning-by-doing and find significant benefits from imitating colleagues in Morocco. |
| Keywords: | Earnings functions, informal training, learning-by-watching, learning-by-doing,returns to tenure, African countries |
| JEL: | J24 J31 O12 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:dia:wpaper:dt200709&r=lab |
| By: | Laszlo Goerke (University of Tübingen, CESifo and IZA); Markus Pannenberg (DIW Berlin, University of Applied Sciences Bielefeld and IZA); Heinrich W. Ursprung (University of Konstanz and CESifo) |
| Abstract: | Evidently, the benefit-structure of the unemployment insurance has a significant influence on profits and trade union utility. We show for a wage bargaining model that a stronger earnings relationship of unemployment benefits may reduce wages and increase employment. This raises the question as to how the benefit structure is determined in the political process. To answer this question, we consider a government that chooses the earnings relationship with a view to maximising its political support. Our model predicts a strong earnings relationship under right-wing governments and a weak one when the unions' influence is pronounced. Deepening international economic integration has ambiguous effects. Using panel data for 19 OECD countries from 1961 to 2003 we find support for the hypothesized domestic influences and show that the earnings relationship varies negatively with openness. |
| Keywords: | earnings relationship, panel data, political support maximization, wage bargaining, unemployment benefits |
| JEL: | D72 J51 J65 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3003&r=lab |
| By: | Sandén, Klas (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | This paper investigates the relationship between various market imperfections and the skill premium. The model in this paper assumes perfectly competitive labor markets but distorted product and financial markets. The model predicts that the skill premium is positively correlated with market power, modeled using preference for variety, and shorter product cycles. The effect from financial market distortions or taxes on financial income is ambiguous. Positive external effects among firms developing new goods decrease the skill premium. <p> |
| Keywords: | Wage Inequality; Monopolistic Competition; Innovation |
| JEL: | D33 D43 D50 D91 D92 J31 L13 O31 |
| Date: | 2007–09–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0264&r=lab |
| By: | Justina A.V. Fischer; Alfonso Sousa-Poza |
| Abstract: | This paper evaluates the relationship between job satisfaction and measures of health of workers over 50 using the Swiss Household Panel (SHP) and cross-sectional data from the Survey on Health, Ageing and Retirement in Europe (SHARE). Methodologically, it addresses two important design problems encountered frequently in the literature: (a) cross-sectional causality problems and (b) absence of objective measures of physical health and intellectual ability that complement self-reported measures of health status. Not only does using the SHP panel structure with job satisfaction lagged mitigate the simultaneity bias, employing the objective health measures in the SHARE dataset addresses measurement problems resulting from respondents’ affective states. For all datasets, we find a positive link between job satisfaction and self-report health measures; that is, employees with higher job satisfaction levels feel healthier, are less depressed, and report fewer impediments in their daily activities. However, once objective measures of physical health are employed, we observe no such link. Rather, the only positive relationship is for intellectual abilities. These primary findings are then tested using additional controls for working conditions, prior health state and affective mental state. The results indicate that job satisfaction partly serves as a transmission channel. |
| Keywords: | job satisfaction, health, panel data analysis |
| JEL: | I18 I19 J28 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:usg:dp2007:2007-31&r=lab |
| By: | Arnab K. Basu (College of William and Mary); Nancy H. Chau (Cornell University and IZA); Ravi Kanbur (Cornell University) |
| Abstract: | Both raw intuition and past experience suggest that the success of an employment guarantee scheme (EGS) in safeguarding the welfare of the poor depends both on the wage it promises, and the ease with which any worker can gain access. An EGS is thus at once a wage guarantee and a rationing device. We chart the positive and normative limits of such an EGS as an efficiency improving and poverty alleviating policy reform in a canonical labor market setting. At its core, an EGS provides an aggregate, not just EGS, employment target. Given the target, the EGS wage and access can be fine-tuned to deliver outcomes ranging from a contestable labor market to a simple universal unemployment benefit. The credibility of any such target, however, is shown to be triggered endogenously by a host of factors: the distributional concerns of the planner, private sector productivity, the prevalence of market power and the need for public works. Paradoxically, the outcome with a planner who cares only about efficiency can be less efficient than the outcome with a planner whose social welfare function also gives weight to poverty! |
| Keywords: | employment guarantees, employment targeting, credibility, distribution concern |
| JEL: | I38 J21 K31 O12 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3002&r=lab |
| By: | Elizabeth Oltmans Ananat; Daniel M. Hungerman |
| Abstract: | In this paper we ask how the diffusion of oral contraception to young unmarried women affected the number and maternal characteristics of children born to these women. Using census data, we find that early pill access led to an increase in the share of children whose mothers were married, college-educated, and had professional occupations. The pill's effects on the average mother are different from the pill's effects on the average woman, and the effects of the pill on maternal characteristics are in some instances different from the effects of abortion. We investigate the mechanisms by which the pill led to these differential effects and find that access to the pill led to falls in short-term fertility rates for young women and led to decreases in lifetime fertility at the intensive and extensive margins. The impacts of the pill on household characteristics are thus associated with retiming of births, changes in the characteristics of potential mothers, changes in which women become mothers, and by reductions in completed family size. Finally, while the pill affected maternal characteristics differently than abortion, we find suggestive results that availability of the pill lowered abortions among young women. |
| JEL: | I0 J13 N12 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13402&r=lab |
| By: | Alisher Aldashevy; Johannes Gernandt; Stephan L. Thomsen (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg) |
| Abstract: | Language ability may not only affect the earnings of the individual, but the participation to participate in the labor market or becoming employed as well. It may also affect selection of people into economic sectors and occupation. In this paper the effects of language ability on earnings are analyzed for foreigners in Germany with joint consideration of up to four types of self-selection. The results show that language profciency signifcantly increases participation and employment probability and affects earnings directly. However, when self-selection into economic sectors and occupation is regarded, the direct effects of language ability on earnings vanish. |
| Keywords: | Migration, Language Ability, Multiple Selection, Selection Bias, Germany |
| JEL: | J61 I12 J15 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:mag:wpaper:07018&r=lab |
| By: | Eriksson, Stefan (Department of Economics, Uppsala University); Lagerström, Jonas (IFAU - Institute for Labour Market Policy Evaluation) |
| Abstract: | This paper uses data from an Internet-based CV database to investigate how factors which may be used as a basis for discrimination, such as the searchers’ ethnicity, gender, age and employment status, affect the number of contacts they receive from firms. Since we have access to essentially the same information as the firms, we can handle the problems associated with unobserved heterogeneity better than most existing studies of discrimination. We find that, even when we control for all other differences, searchers who have non-Nordic names, are old or unemployed receive significantly fewer contacts. Moreover, we find that this matters for the hiring outcome: Searchers who receive more contacts have a higher probability of actually getting hired. |
| Keywords: | Job search; Unobserved heterogeneity; Discrimination |
| JEL: | J64 J71 |
| Date: | 2007–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2007_019&r=lab |
| By: | Stefano Bartolini; Ennio Bilancini |
| Abstract: | In this paper we empirically investigate the relationship between social capital and the supply of labor. We identify social capital with non-market relationships. Data are obtained from the US General Social Survey for the period 1976-2004. We find evidence that social capital affects the supply of labor. In particular non-instrumental relations reduce the supply of labor, whereas instrumental relations increase it. Moreover, there are substantial differences between men and women: social capital has a greater impact on the labor supply of women. Our findings suggest that Putnam’s thesis that the decline of US social capital is largely due to the increase in participation of women to the labor market may be partly reversed: the decline of US intrinsic social capital has fostered women’s labor market participation. |
| Keywords: | intrinsic motivations, labor supply, relational goods, social capital |
| JEL: | J2 I3 Z1 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:511&r=lab |
| By: | Collie, David R. (Cardiff Business School) |
| Abstract: | Freeman (2006) suggested that auctioning immigration visas and redistributing the revenue to native residents in the host country would increase migration from low-income to high-income countries. The effect of the auctioning of immigration visas, in the Ricardian model from Findlay (1982), on the optimal level of immigration for the host country is considered. It is shown that auctioning immigration visas will lead to a positive level of immigration only if the initial wage difference between the host country and the source country is substantial. The cost of the immigration visa is more than half the earnings of the immigrant worker. |
| Keywords: | Immigration; migration; international trade |
| JEL: | F22 F12 J61 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2007/25&r=lab |
| By: | Dan Black; Natalia Kolesnikova; Lowell J. Taylor |
| Abstract: | In this paper we study whether location-specific price variation likely affects statistical inference and theoretical interpretation in the empirical implementation of human capital earnings functions. We demonstrate, in a model of local labor markets, that the ?return to schooling" is a constant across locations if and only if preferences are homothetic ? a special case that seems unlikely to generally pertain. Examination of U.S. Census data (for 1980, 1990, and 2000) provides persuasive evidence that the return to a college education, relative to a high school education, does indeed vary widely across cities, e.g., in 1990 the return in Houston is 0.54 while in Seattle it is only 0.33. We provide theoretical reasons to suspect that the returns to education are relatively lower in expensive high-amenity locations, and present evidence consistent with this prediction. Finally, we raise concerns about standard empirical exercises in labor economics which treat the returns to education as a single parameter. |
| Keywords: | Wages ; Labor market ; Education |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:2007-031&r=lab |