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on Labour Economics |
| By: | Catherine Fuss (Research Department, National Bank of Belgium, Boulevard de Berlaimont 14, B-1000 Brussels, Belgium.) |
| Abstract: | This paper decomposes wage bill changes at the firm level into components due to wage changes, and components due to net flows of employment. The analysis relies on an administrative employer-employee dataset of individual annual earnings matched with firms' annual accounts for Belgium over the period 1997-2001. Results point to asymmetric behaviour depending on economic conditions. On average, wage bill contractions result essentially from employment cuts in spite of wage increases. Wage growth of job stayers is moderated but still positive; and wages of entrants compared with those of incumbents are no lower. The labour force cuts are achieved through both reduced entries and increased exits. Higher exits may be due to more layoffs, especially in smaller firms, and wider use of early retirement, especially in manufacturing. In addition, the paper points up the role of overtime hours, temporary unemployment and interim workers in adapting to short-run fluctuations. JEL Classification: J30, J60. |
| Keywords: | Wages, employment flows, matched employer-employee data. |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20070854&r=lab |
| By: | Zenou, Yves (Stockholm University) |
| Abstract: | We develop a model where information about jobs is essentially obtained through friends and relatives, i.e. strong and weak ties. Workers commute to a business center to work and to interact with other people. We find that housing prices increase with the level of social interactions in the city because information about jobs is transmitted more rapidly and, as a result, individuals are more likely to be employed and to be able to pay higher land rents. We also show that, under some condition, workers using more their weak ties than strong ties to find a job receive a higher wage. We finally demonstrate that workers living far away from jobs pay lower housing prices but experience higher unemployment rates than those living close to jobs because they mainly rely on their strong ties to obtain information about jobs. |
| Keywords: | social networks, labor market, weak ties, land rent |
| JEL: | D85 J60 R14 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3283&r=lab |
| By: | Wolf, Elke; Heinze, Anja |
| Abstract: | This paper provides a new approach to assess the impact of organisational changes fostering employee involvement, performance related pay schemes and other relevant trends in personnel policy on the gender wage gap. Our results indicate that innovative human resource practices tend to limit the wage differential between men and women. The innovation of this study is that we use linked employer-employee data to look at within-firm gender wage differentials. To investigate the theoretical hypotheses regarding the effect of selected human resource measures on gender wage inequality, we calculate a firm-specific gender wage gap accounting for differences in individual characteristics. |
| Keywords: | gender wage gap, within-firms wage differentials, organizational change, performance-related pay systems |
| JEL: | J16 J31 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:6897&r=lab |
| By: | Addison, John T. (University of South Carolina); Centeno, Mário (Banco de Portugal); Portugal, Pedro (Universidade Nova de Lisboa) |
| Abstract: | Using cross-country data, we investigate the determinants of reservation wages and their course over the jobless spell. Higher unemployment benefits lead to higher reservation wages. Further, again consistent with the basic search model, repeated observations on the same individual provide scant evidence of declining reservation wages. |
| Keywords: | reservation wages, probability of reemployment, arrival rate of job offers, unemployment benefits |
| JEL: | J64 J65 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3289&r=lab |
| By: | Ingo Geishecker; Holger Görg; Jakob Roland Munch |
| Abstract: | This paper studies the impact of outsourcing on individual wages in three European countries with markedly different labour market institutions: Germany, the UK and Denmark. To do so we use individual level data sets for the three countries and construct comparable measures of outsourcing at the industry level, distinguishing outsourcing by broad region. Estimating the same specification on different data show that there are some interesting differences in the effect of outsourcing across countries. We discuss some possible reasons for these differences based on labour market institutions. |
| Keywords: | International outsourcing, individual wages, labour market institutions |
| JEL: | F16 J31 C23 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp81&r=lab |
| By: | Katherin Barg; Miriam Beblo |
| Abstract: | Empirical research has unambiguously shown that married men receive higher wages than unmarried, whereas a wage premium for cohabiters is not as evident yet. Our paper exploits the observed difference between the marital and the cohabiting wage premium in Germany and thus provides new insights into their respective sources, typically explained by specialization (husbands being more productive because their wives take over household chores) or selection (high earnings potentials being more attractive on the marriage market). We analyze the cohabiting and the marital wage premium in Germany using a shifting panel design for marriages and move-ins from 1993 to 2004 in the German Socio-Economic Panel. With non-parametric matching models we match men who get married (treatment group I) with cohabiting or single men (control groups) and men who move in with a partner (treatment group II) with singles. Matching reveals that higher wages are mostly due to positive selection – into marriage as well as into cohabitation. Supplementary analysis of intra-household time use suggests that specialization, if any, is part of the selection process from single to cohabitation to marriage. |
| Keywords: | Marital wage premium, cohabitation, matching approach |
| JEL: | J12 J31 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp82&r=lab |
| By: | Julio J. Rotemberg |
| Abstract: | This paper presents a model in which firms recruit both unemployed and employed workers by posting vacancies. Firms act monopsonistically and set wages to retain their existing workers as well as to attract new ones. The model differs from Burdett and Mortensen (1998) in that its assumptions ensure that there is an equilibrium where all firms pay the same wage. The paper analyzes the response of this wage to exogenous changes in the marginal revenue product of labor. The paper finds parameters for which the response of wages is modest relative to the response of employment, as appears to be the case in U.S. data and shows that the insistence by workers that firms act with a minimal level of altruism can be a source of dampened wage responses. The paper also considers a setting where this minimal level of altruism is subject to fluctuations and shows that, for certain parameters, the model can explain both the standard deviations of employment and wages and the correlation between these two series over time. |
| JEL: | D64 E24 J30 J64 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13755&r=lab |
| By: | Plug, Erik (University of Amsterdam); Berkhout, Peter (SEO Amsterdam) |
| Abstract: | Gay/bisexual workers tend to earn less than other men. Does this occur because of discrimination or because of selection? In this paper we address this question and collect new information on workplace disclosure to separate out discrimination effects from selection effects. Using a large sample of recently graduated men in the Netherlands, we find that gay/bisexual workers earn about 3 to 4 percent less than other men. Our disclosure estimates, however, provide little evidence that the labor market discriminates against gay/bisexual workers. They rather support the selection story, most prominently observed among undisclosed gay/bisexual workers who concentrate in lower paid occupations, and earn about 5 to 9 percent less than other men. |
| Keywords: | sexual orientation, disclosure, earnings, discrimination, selection |
| JEL: | J15 J24 J71 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3290&r=lab |
| By: | Kitty Stewart |
| Abstract: | UK government policy encourages mothers of young children in low-income families to enter or return to work, via tax credit subsidies and support for childcare. Maternal employment is seen a central plank in the campaign against child poverty, both because it raises income immediately and because working now is seen as paving the way to better employment prospects in the future. But there is little evidence about medium- and long-term outcomes for mothers entering low skilled employment. We know little about how likely such women are to remain in work, let alone how likely they are to progress to higher skilled and better paid jobs. This paper uses a dataset which tracked lone mothers from 1991 to 2001 to examine employment trajectories for 560 mothers with a youngest child under five at the start of the period. It creates a typology of trajectories over the decade, identifying the share of women broadly stable in work, those broadly stable at home and those following unstable pathways between the two. It goes on to explore the factors associated with different pathways, asking whether individual and household characteristics, job characteristics, or circumstantial factors such as re-partnering are most important. Finally, the paper examines differences in wage progression across groups of women following different pathways, and similarly tries to identify the main factors associated with faster progress. |
| Keywords: | maternal employment, employment trajectories, wage progression |
| JEL: | J22 J24 J31 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sticas:/122&r=lab |
| By: | Dennis L. Gärtner; Manfred Gärtner |
| Abstract: | When labor incomes approach subsistence levels, the labor supply curve slopes outward, because the fight for survival mandates households to look for longer work hours in response to falling wage rates. We explore conditions under which near-subsistence scenarios may imply wage traps, labor market failures that can be the cause of undernourishment, illiteracy, and child labor. After stating general conditions under which wage traps occur, we look at specific production functions typically employed in quantitative analyses of growth and development. We find that standard Cobb-Douglas production functions do not permit wage traps, whereas CES functions do. Beyond that it turns out that when subsistence requirements increase with work hours, and when work effort rises with the wage rate, up to the efficiency-wage threshold, wage traps become more likely. Measures such as bans on child labor, implementation of minimum wage laws, or the establishment of labor unions may quite effectively improve conditions in wage-trapped labor markets. |
| Keywords: | Subsistence income, labor supply, poverty, child labor, wage trap, market failure, development, growth |
| JEL: | J2 J4 O11 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:usg:dp2008:2008-02&r=lab |
| By: | Guido Menzio; Shouyong Shi |
| Abstract: | In this paper, we develop a tractable model of the labor market where workers search for jobs both while unemployed and while on the job. Search is directed in the sense that each worker chooses to search for the offer that provides the optimal tradeoff between the probability of obtaining the offer and the increase in the value relative to the worker's current employment. There are both aggregate and match-specific shocks, on which the wage path in an offer can be contingent. We characterize the equilibrium analytically and show that the equilibrium is unique and socially efficient. On the quantitative side, we calibrate the model to the US data to measure the effect of aggregate productivity fluctuations on the labor market. We find that productivity fluctuations account for approximately 64% of the cyclical volatility in US unemployment. Moreover, productivity fluctuations generate the same matrix of correlations between unemployment and other labor market variables as in the US. In particular, the Beveridge curve is negatively sloped over business cycles, and the magnitude of the slope is the same as in the data. In light of these findings, we conclude that productivity shocks are one of the main forces driving labor market fluctuations over business cycles. Furthermore, we find that recessions have a cleansing effect on the economy. |
| Keywords: | Directed Search; On the Job Search; Unemployment Fluctuations |
| JEL: | E24 E32 J64 |
| Date: | 2008–01–21 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-308&r=lab |
| By: | Andrea Bassanini (ERMES - Equipe de recherche sur les marches, l'emploi et la simulation - CNRS : UMR7017 - Université Panthéon-Assas - Paris II, CEPN - Centre d'économie de l'Université de Paris Nord - CNRS : UMR7115 - Université Paris-Nord - Paris XIII); Giorgio Brunello (dipartimento di scienze economiche - Universita di Padova) |
| Abstract: | According to Becker [1964], when labour markets are perfectly competitive, general training is paid by the worker, who reaps all the benefits from the investment. Therefore, ceteris paribus, the greater the training wage premium, the greater the investment in general training. Using data from the European Community Household Panel, we compute a proxy of the training wage premium in clusters of homogeneous workers and find that smaller premia induce greater incidence of off-site training, which is likely to impart general skills. Our findings suggest that the Becker model provides insufficient guidance to understand empirical training patterns. Conversely, they are not inconsistent with theories of training in imperfectly competitive labour markets, in which firms may be willing to finance general training if the wage structure is compressed, that is, if the increase in productivity after training is greater than the increase in pay. |
| Keywords: | General training; Off-site training; Training wage premia; Wage compression; ECHP |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00214192_v1&r=lab |
| By: | Bargain, Olivier (University College Dublin); Bhaumik, Sumon (Brunel University); Chakrabarty, Manisha (Indian Institute of Management); Zhao, Zhong (IZA) |
| Abstract: | This paper is one of the first comprehensive attempts to compare earnings in urban China and India over the recent period. While both economies have grown considerably, we illustrate significant cross-country differences in wage growth since the late 1980s. For this purpose, we make use of comparable datasets, estimate Mincer equations and perform Oaxaca-Blinder decompositions at the mean and quantile decompositions at different points of the wage distribution. The initial wage differential in favour of Indian workers, observed in the middle and upper part of the distribution, partly disappears over time. While the 1980s Indian premium is mainly due to higher returns to education and experience, a combination of price and endowment effects explains why Chinese wages have caught up, especially since the mid-1990s. The price effect is only partly explained by the observed convergence in returns to education; the endowment effect is driven by faster increase in education levels in China and significantly accentuates the reversal of the wage gap in favour of this country for the first half of the wage distribution. |
| Keywords: | returns to education, earnings, India, China, quantile regression, Oaxaca-Blinder decomposition |
| JEL: | O15 J24 O53 P52 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3284&r=lab |
| By: | Jürg Schweri (EHB Schweiz); Stefan C. Wolter (Institute of Economics, University of Berne); Joop Hartog |
| Abstract: | We use a unique data set about the future wage distribution that Swiss students expect for themselves ex-ante, suggesting that students use very little private information about their wage prospects. Expectations appear much more anchored to perceptions of actual contemporaneous market data. Students even anticipate that the market provides compensation for risk, as has been established with Risk Augmented Mincer earnings equations estimated on market data: higher wage risk for educational groups is associated with higher mean wages. With observations on risk as expected by students we find compensation at similar elasticities as observed in market data. The results are robust to different specifications and estimation models. |
| Keywords: | wage, expectations, wage risk, risk compensation, skewness |
| JEL: | D8 I2 J2 J3 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iso:educat:0011&r=lab |
| By: | Görlich Dennis; Grip Andries de (ROA rm) |
| Abstract: | Human Capital Depreciation during Family-related Career Inter¬ruptions in Male and Female Occupations This study investigates the relation between human capital depreciation during family-related career interruptions and occupational choice of women in the (West) German labour market. In contrast to other studies that do not explicitly focus on family-related career interruptions, we find that short-term human capital depreciation during these career interruptions is significantly lower in female occupations than in male occupations. This holds for both high- and low-skilled occupations. Our findings support the self-selection hypothesis with respect to occupational sex segregation, i.e. women might deliberately choose female occupations because of lower short-term wage penalties for family-related career interruptions. Moreover, we find that particularly men employed in high-skilled male occupations face large short-run as well as long run wage penalties when they have a family related career break. |
| Keywords: | education, training and the labour market; |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umaror:2007007&r=lab |
| By: | Jirjahn, Uwe (University of Hannover); Kraft, Kornelius (University of Dortmund) |
| Abstract: | Using data on a sample of manufacturing establishments in Germany, we find that the use of self-managed teams is associated with increased intra-firm wage inequality between skilled and unskilled blue-collar workers. We also show that moderating factors play an important role. While teamwork interacts positively with employer-provided further training and a production technology of the most recent vintage, it interacts negatively with the age of the establishment and the coverage by a collective bargaining agreement. |
| Keywords: | technology, training, skill-biased organizational change, wage inequality, establishment age, collective bargaining |
| JEL: | J30 J31 M52 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3291&r=lab |
| By: | Sebastian Buhai (Aarhus School of Business, University of Aarhus and Tinbergen Institute/Erasmus Univ. Rotterdam); Miguel Portela (Universidade do Minho - NIPE); Coen Teulings (CPB Netherlands Bureau for Economic Analysis, Univ. of Amsterdam and Tinbergen Institute); Aico van Vuuren (Free University Amsterdam and Tinbergen Institute) |
| Abstract: | This study documents two empirical regularities, using data for Denmark and Portugal. First, workers who are hired last, are the first to leave the firm (Last In, First Out; LIFO). Second, workers’ wages rise with seniority (= a worker’s tenure relative to the tenure of her colleagues). We seek to explain these regularities by developing a dynamic model of the firm with stochastic product demand and hiring cost (= irreversible specific investments). There is wage bargaining between a worker and its firm. Separations (quits or layoffs) obey the LIFO rule and bargaining is efficient (a zero surplus at the moment of separation). The LIFO rule provides a stronger bargaining position for senior workers, leading to a return to seniority in wages. Efficiency in hiring requires the workers’ bargaining power to be in line with their share in the cost of specific investment. Then, the LIFO rule is a way to protect their property right on the specific investment. We consider the effects of Employment Protection Legislation and risk aversion. |
| Keywords: | irreversible investment, efficient bargaining, seniority, LIFO, matched employer-employee data, EPL. |
| JEL: | J31 J41 J63 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:02/2008&r=lab |
| By: | Gindling, T. H. (University of Maryland, Baltimore County); Oviedo, Luis (University of Costa Rica) |
| Abstract: | Despite increasing average real family incomes in Costa Rica in the late 1990s and early 2000s, poverty rates did not fall. In this paper, we argue that during this period economic growth in Costa Rica did not translate into reduced poverty because of changes in family structure and in the labor market, and that these changes had an important gender dimension. Specifically, an increase in the proportion of Costa Rican households headed by single mothers led to an increase in the number of women with children entering the labor force. Many of these mothers, new entrants to the labor force, were unable or unwilling to find full-time work in the high-paying formal sector, and ended up unemployed or working part-time as self-employed workers. These labor market phenomena, in turn, contributed to low incomes for households vulnerable to poverty, especially those households headed by single mothers. |
| Keywords: | Central America, wages, employment, single mothers, poverty, Costa Rica |
| JEL: | I32 J12 J38 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3286&r=lab |
| By: | Stefanie Behncke; Markus Fröhlich; Michael Lechner |
| Abstract: | In many countries, caseworkers in a public employment office have the dual roles of counselling and monitoring unemployed persons. These roles often conflict with each other leading to important caseworker heterogeneity: Some consider providing services to their clients and satisfying their demands as their primary task. Others may however pursue their strategies even against the will of the unemployed person. They may assign job assignments and labour market programmes without consent of the unemployed person. Based on a very detailed linked jobseeker-caseworker dataset, we investigate the effects of caseworkers' cooperativeness on the employment probabilities of their clients. Modified statistical matching methods reveal that caseworkers who place less emphasis on a cooperative and harmonic relationship with their clients increase their employment chances in the short and medium term. |
| Keywords: | Public employment services, unemployment, statistical matching methods |
| JEL: | J68 C31 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:usg:dp2007:2007-45&r=lab |
| By: | Sala, Hector (Universitat Autònoma de Barcelona); Silva, José I. (Universitat Jaume I de Castelló); Toledo, Manuel E. (Universidad Carlos III, Madrid) |
| Abstract: | We study whether segmented labor markets with flexibility at the margin (e.g., just affecting fixed-term employees) can achieve similar volatility than fully deregulated labor markets. Flexibility at the margin produces a gap in separation costs among matched workers that cause fixed-term employment to be the main workforce adjustment device, which in turn increases de labor market volatility. This increased volatility is partially reverted when limitations in the duration and number of renewals of fixed-term contracts are introduced. Under this scenario, firms respond by reducing the intensity of job destruction since it becomes more difficult to avoid firing costs in permanents contracts. We present a matching model with temporary and permanent jobs where (i) the gap in firing costs and (ii) restrictions in the use of fixed-term contracts helps explain the similar volatility observed in many regulated OECD labor markets with flexibility at the margin vis-à-vis the fully deregulated ones. |
| Keywords: | separation costs, volatility, flexibility at the margin, matching model |
| JEL: | J23 J41 J63 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3293&r=lab |
| By: | Alós-Ferrer, Carlos (University of Konstanz); Prat, Julien (University of Vienna) |
| Abstract: | This paper extends the job market signaling model of Spence (1973) by allowing firms to learn the ability of their employees over time. Contrary to the model without employer learning, we find that the Intuitive Criterion does not always select a unique separating equilibrium. When the Intuitive Criterion bites and information is purely asymmetric, the separating level of education does not depend on the observability of workers’ types. On the other hand, when workers are also uncertain about their productivity, the separating level of education is ambiguously related to the speed of employer learning. |
| Keywords: | employer learning, education, job markets, signaling, intuitive criterion |
| JEL: | I20 C70 D82 D83 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3285&r=lab |
| By: | Addison, John T. (University of South Carolina); Belfield, Clive R. (Queens College, CUNY) |
| Abstract: | The present paper uses a combination of workplace and linked employee-workplace data from the 1998 Workplace Employee Relations Survey and the 2004 Workplace Employment Relations Survey to examine the impact of unions on training incidence, training intensity/coverage, and training duration. It also examines the impact of unions and training on earnings and a measure of establishment labour productivity. In addition, the implications of training for the firm’s bottom line are evaluated. Union effects on training emerge as fairly subtle, and are more positive when using individual rather than plant-wide training data. A positive impact of training on earnings is detected in both the individual and plant-wide wage data, albeit only for the earlier survey. Consistent with other recent findings, the effects of union recognition on earnings are today rather muted, while union-training interaction effects vary greatly. Instrumenting training provides positive results for the labour productivity outcome and, in the case of the earlier survey, for the financial performance indicator as well. However, some negative effects of unions are now also detected. |
| Keywords: | labour productivity, union recognition, bargaining structure, employer-provided training, training Incidence, training intensity/coverage, training duration, earnings, financial performance |
| JEL: | J24 J33 J51 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3294&r=lab |
| By: | Del Bono, Emilia (ISER, University of Essex); Weber, Andrea (University of California, Berkeley); Winter-Ebmer, Rudolf (University of Linz) |
| Abstract: | In this paper we investigate how fertility decisions respond to unexpected career interruptions which occur as a consequence of job displacement. Using an event study approach we compare the birth rates of displaced women with those of women unaffected by job loss after establishing the pre-displacement comparability of these groups. Our results reveal that job displacement reduces average fertility by 5 to 10% in both the short and medium term (3 and 6 years) and that these effects are largely explained by the response of white collar women. Using an instrumental variable approach we provide evidence that the reduction in fertility is not due to the income loss generated by unemployment but arises because displaced workers undergo a career interruption. These results are interpreted in the light of a model in which the rate of human capital accumulation slows down after the birth of a child and all specific human capital is destroyed upon job loss. |
| Keywords: | fertility, unemployment, plant closings, human capital |
| JEL: | J13 J64 J65 J24 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3272&r=lab |
| By: | Coneus, Katja; Goeggel, Kathrin; Muehler, Grit |
| Abstract: | When estimating the determinants of child care participation, the simultaneity in mothers' decision to work and in the decision to use child care is a major challenge. In this study, we provide evidence on the determinants of institutional child care use accounting for the endogeneity of mothers' labor supply by applying an instrumental variables approach. This endogeneity has been neglected in studies on this issue so far, even though the decision to use child care outside the home is strongly connected to mothers' decision to work after childbirth and vice versa. Based on the German Socio-economic Panel (GSOEP) from 1989{2006 we show that children living in Western Germany have a higher probability to attend institutional care if their mothers increase their actual weekly working time. Estimating the determining factors of child care participation without correcting for simultaneity underestimates the influence of maternal working time by more than a half. |
| Keywords: | child care choice, kindergarten attendance, maternal employment |
| JEL: | I21 J13 J22 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:6894&r=lab |
| By: | Stefania Albanesi (Department of Economics, Columbia University); Claudia Olivetti (Boston University - Department of Economics) |
| Abstract: | Until the early decades of the 20th century, women spent more than 60% of their prime-age years either pregnant or nursing. Since then, the introduction of infant formula reduced women's comparative advantage in infant care, by providing an effective breast milk substitute. In addition, improved medical knowledge and obstetric practices reduced the time cost associated with women's reproductive role. We explore the hypothesis that these developments enabled married women to increase their participation in the labor force, thus providing the incentive to invest in market skills, which in turn reduced their earnings differential with respect to men. We document these changes and develop a quantitative model that aims to capture their impact. Our results suggest that progress in medical technologies related to motherhood was essential to generate a significant rise in the participation of married women between 1920 and 1950, in particular those with young children. |
| JEL: | J13 J16 J2 J22 N3 O3 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:clu:wpaper:0607-12&r=lab |
| By: | Costa Dias, Monica (Institute for Fiscal Studies, London); Ichimura, Hidehiko (University of Tokyo); van den Berg, Gerard J. (Free University of Amsterdam) |
| Abstract: | The matching method for treatment evaluation does not balance selective unobserved differences between treated and non-treated. We derive a simple correction term if there is an instrument that shifts the treatment probability to zero in specific cases. Policies with eligibility restrictions, where treatment is impossible if some variable exceeds a certain value, provide a natural application. In an empirical analysis, we first examine the performance of matching versus regression-discontinuity estimation in the sharp age-discontinuity design of the NDYP job search assistance program for young unemployed in the UK. Next, we exploit the age eligibility restriction in the Swedish Youth Practice subsidized work program for young unemployed, where compliance is imperfect among the young. Adjusting the matching estimator for selectivity changes the results towards ineffectiveness of subsidized work in moving individuals into employment. |
| Keywords: | job search assistance, selection, regression discontinuity, treatment effect, policy evaluation, propensity score, subsidized work, youth unemployment |
| JEL: | C21 C14 C31 J64 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3280&r=lab |
| By: | Marcus Hagedorn (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Iourii Manovskii (Department of Economics, University of Pennsylvania, 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA, 19104-6297, USA.) |
| Abstract: | Recently, a number of authors have argued that the standard search model cannot generate the observed business-cycle-frequency fluctuations in unemployment and job vacancies, given shocks of a plausible magnitude. We use data on the cost of vacancy creation and cyclicality of wages to identify the two key parameters of the model - the value of non-market activity and the bargaining weights. Our calibration implies that the model is, in fact, consistent with the data. JEL Classification: E24, E32, J41, J63, J64. |
| Keywords: | Search, matching, business cycles, labor markets. |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20070853&r=lab |
| By: | Andrew E. Clark; Ed Diener; Yannis Georgellis; Richard E. Lucas |
| Abstract: | We look for evidence of habituation in twenty waves of German panel data: do individuals, after life and labour market events, tend to return to some baseline level of well-being? Although the strongest life satisfaction effect is often at the time of the event, we find significant lag and lead effects. We cannot reject the hypothesis of complete adaptation to marriage, divorce, widowhood, birth of child, and layoff. However, there is little evidence of adaptation to unemployment for men. Men are somewhat more affected by labour market events (unemployment and layoffs) than are women, but in general the patterns of anticipation and adaptation are remarkably similar by sex. |
| Keywords: | Life satisfaction; anticipation; adaptation; baseline satisfaction; labour market and life events |
| JEL: | I31 J12 J13 J63 J64 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp84&r=lab |
| By: | Fitzenberger, Bernd; Osikominu, Aderonke; Völter, Robert |
| Abstract: | Long–term public sector sponsored training programs often show little or negative short–run employment effects and often it is not possible to assess whether positive long–run effects exist. Based on unique administrative data, this paper estimates the long–run differential employment effects of three different types of training programs in West Germany. We use inflows into unemployment for the years 1986/87 and 1993/94 and apply local linear matching based on the estimated propensity score to estimate the effects of training programs starting during 1 to 2, 3 to 4, and 5 to 8 quarters of unemployment. The results show a negative lock–in effect for the period right after the beginning of the programs and significantly positive treatment effects on employment rates in the medium and long run. The differential effects of the three programs compared to one another are mainly driven by differences in the length of the lock–in periods. |
| Keywords: | multiple treatments, training programs, employment effects, local linear matching, administrative data, active labor market programs |
| JEL: | C14 H43 J68 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:6885&r=lab |
| By: | Jeanette Findlay |
| Abstract: | The persistence of gendered pay inequality some 30 years after its formal prohibition raises questions over the mechanisms sustaining it. Recent contributions highlight the role of low skills visibility and valuation in maintaining pay inequality in predominantly female occupations. We examine the skills and rewards of early years’ workers and the organisational processes that define them. We do so at an important juncture when the importance and regulation of the ‘early years’’ sector has increased significantly; and following extensive organisational restructuring aimed at delivering pay equality. We conclude that whilst the application of more systematic forms of skill measurement have improved the relative rewards of nursery nurses, highly gendered constructions of their skills, particularly those most closely linked to mothering, continue to impact negatively on their valuation. The presence of caring activities appears to eclipse their role in education. Complex institutional and organisational factors maintain important aspects of gender inequality. |
| Keywords: | caring, early years’, gender, grading, inequality, pay, skills, valuation |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:gla:glaewp:2007_43figures&r=lab |
| By: | Mühlenweg, Andrea Maria |
| Abstract: | This paper examines educational outcomes of pupils selected to secondary school types by different tracking regimes in a German state: Pupils are alternatively streamed after fourth grade or after sixth grade. Regression results indicate that, estimated on the mean, there are no negative effects of later tracking on educational outcomes in the middle of secondary school. Positive effects are observed for pupils with a less favorable family background. Quantile regressions reveal that the estimated effects of later tracking are positive for the lower quantiles but decrease monotonically over the conditional distribution of test scores. |
| Keywords: | education, segregation, immigration, school effects |
| JEL: | I21 I28 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:6899&r=lab |
| By: | Brunello, Giorgio (University of Padova); De Paola, Maria (University of Calabria); Scoppa, Vincenzo (University of Calabria) |
| Abstract: | Economists have a poor understanding of the mechanisms underlying reduced-form college peer effects. In this paper we explore a candidate mechanism, the provision of school effort. We show that, when earnings reflect individual educational performance as well as the field of study selected at college, and individual effort is a function of expected earnings, the size of the peer effect varies by field. Using data from a middle-sized public university located in Southern Italy and exploiting the random assignment of first year students to college accommodation, we find evidence that peer effects are positive and statistically significant for students enrolled in the fields of Engineering, Maths and Natural Sciences – which are expected to generate higher earnings after college – and not different from zero for students enrolled in the Humanities, Social and Life Sciences, which give access to lower payoffs. An implication of our model is that shocks affecting college wage premia may alter the size of peer effects. |
| Keywords: | optimal effort, fields of study, Italy, random assignment, peer effects |
| JEL: | I21 Z13 J24 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3277&r=lab |
| By: | Porto, Guido |
| Abstract: | This paper estimates the impacts of world agricultural trade liberalization on wages, employment and unemployment in Argentina, a country with positive net agricultural exports and high unemployment rates. In the estimation of these wage and unemployment responses, the empirical model allows for individual labor supply responses and for adjustment costs in labor demand. The findings show that a 10 percent increase in the price of agricultural exports would cause an increase in the Argentine employment probability of 1.36 percentage points, matched by a decline in the unemployment probability of 0.75 percentage points and an increase in labor market participation of 0.61 percentage points. Further, the unemployment rate would decl ine by 1.23 percentage points (by almost 10 percent). Expected wages would increase by 10.3 percent, an effect that is mostly driven by higher employment probabilities. This indicates that the bulk of the impacts of trade reforms originates in household responses in the presence of adjustment costs, and that failure to account for them may lead to significant biases in the welfare evaluation of trade policy. |
| Keywords: | Labor Markets,Labor Policies,Economic Theory & Research,,Markets and Market Access |
| Date: | 2008–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4489&r=lab |
| By: | Christelle Dumas (University Cergy-Pontoise-Thema. 33, bd du Port. 95011 Cergy-Pontoise. France.) |
| Abstract: | This paper assesses the impact of labor performed during childhood on cognitive achievement of teenagers, measured by tests. Introduction of community fixed effects and use of multiple tests taken at the entry of primary school allows to control for unobserved heterogeneity and mea- surement error in the entry tests. We find no detrimental impact of par- ticipation of children to economic activities on their subsequent learning once controlling for the number of years of education but rather a pos- itive, though small, impact. This could come from increased monetary resources. Working more than 4 hours a week or as an employee though prevents the child to learn as much as the other children. |
| Keywords: | Child labor, Human capital, multiple-indicator, fixed effects. |
| JEL: | I21 J24 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ema:worpap:2008-01&r=lab |
| By: | Baycan-Levent, Tuzin (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Nijkamp, Peter |
| Abstract: | The present paper aims to investigate and compare various modalities of migrant entrepreneurship in European countries in order to design a systematic classification of migrant entrepreneurship and to highlight key factors of migrant entrepreneurship in Europe. The paper is based on a comparative assessment of available quantitative data and qualitative information derived from a broad review of findings from previous studies in the literature. Our quantitative evaluation includes the European OECD countries, while our qualitative investigation addresses migrant entrepreneurship experiences in eight European countries: Denmark, Germany, Greece, Italy, the Netherlands, Portugal, Sweden and the UK. The results of our comparative analysis show that the general picture of European migrant entrepreneurship is determined by some distinct push factors such as high unemployment rates and low participation rates or low status in the labour market as well as by an accompanying factor, viz. mixed embeddedness. The results of our comparative evaluation are summarized in a systematic typological table. These show that, while an informal and labour-intensive sector, an underground economy, and small companies and traditional households prompt migrant entrepreneurship in Southern European countries, an overrepresentation of non-Western immigrants among the self-employed, as well as relatively lower income levels of self-employed immigrants compared to both self-employed natives and employed immigrants are decisive for migrant entrepreneurship in Northern European countries. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:vuarem:2007-14&r=lab |
| By: | Amend, Elke (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Herbst, Patrick |
| Abstract: | "Of the typically cited agglomeration advantages labor market pooling receives strong empirical support - yet remains under-explored theoretically. This paper presents a model of human capital formation in an imperfectly competitive, pooled local labor market with heterogeneous workers and firms. Firms produce for a competitive output market with differing technologies, thus requiring diverse skills. In anticipation of firm behavior, workers choose between specializing into specific skills and accumulating general human capital. While labor market pooling provides static effciency gains, our approach also suggests that there are long-term effects: under a diversified industrial structure, industry-specific shocks lead to a labor market pooling advantage which raises the incentive for workers to acquire both general and specific human capital. This will not only strengthen a region's capability to adapt to change but will also contribute to higher growth." (author's abstract, IAB-Doku) ((en)) |
| JEL: | I20 J24 J41 |
| Date: | 2008–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:200804&r=lab |
| By: | Sadka, Joyce; Kaplan, David S. |
| Abstract: | The authors analyze lawsuits involving publicly-appointed lawyers in a labor court in Mexico to study how a rigid law is enforced. They show that, even after a judge has awarded something to a worker alleging unjust dismissal, the award goes uncollected 56 percent of the time. Workers who are dismissed after working more than seven years, however, do not leave these awards uncollected because their legally-mandated severance payments are larger. A simple theoretical model is used to generate predictions on how lawsuit outcomes should depend on the information available to the worker and on the worker ' s cost of collecting an award after trial, both of which are determined in part by the worker ' s lawyer. Differences in outcomes across lawyers are consistent with the hypothesis that firms take advantage both of workers who are poorly informed and of workers who find it more costly to collect an award after winning at trial. |
| Keywords: | Public Sector Corruption & Anticorruption Measures,Information Security & Privacy,Legal Products,Microfinance,Bankruptcy and Resolution of Financial Distress |
| Date: | 2008–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4483&r=lab |
| By: | Gindling, T. H. (University of Maryland, Baltimore County) |
| Abstract: | More than half of those who emigrate from developing countries move to other developing countries, yet there have been few studies of the impact of this South-South migration. In this paper, we examine the impact of migration from one developing country, Nicaragua, on the labor market in another developing country, Costa Rica. We find little evidence to support the hypothesis that Nicaraguan migration to Costa Rica was an important factor contributing to falling earnings, increased inequality or stagnating poverty in Costa Rica. |
| Keywords: | inequality, earnings, migration, Latin America, Costa Rica, poverty |
| JEL: | J61 O15 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3279&r=lab |
| By: | van Klaveren, Chris (University of Amsterdam); van Praag, Bernard M. S. (University of Amsterdam); Maassen van den Brink, Henriette (University of Amsterdam) |
| Abstract: | In this paper we consider an empirical collective household model of time allocation for two-earner households. The novelty of this paper is that we estimate a version of the collective household model, where the internally produced goods and the externally purchased goods are assumed to be public. The empirical results suggest that: (1) Preferences of men and women differ; (2) Although there are significant individual variations, on average the utility functions of men and women are equally weighted in the household utility function; (3) Differences in the ratio of the partners' hourly wages are explanatory for how individual utilities are weighted in the household utility function. (4) The female's preference for household production is influenced by family size, but this does not hold for the male; (5) Both the male and the female have a backward-bending labor supply curve; (6) Labor-supply curves are forward-bending with respect to the partner's wage rate; (7) Our model rejects the unitary Slutsky symmetry condition. |
| Keywords: | household behavior, collective household models, labor supply, |
| JEL: | D12 D13 J22 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3274&r=lab |
| By: | Maliranta, Mika (The Research Institute of the Finnish Economy); Mohnen, Pierre (UNU-MERIT); Rouvinen, Petri (The Research Institute of the Finnish Economy) |
| Abstract: | An employer-employee panel is used to study whether the movement of workers across firms is a channel of unintended diffusion of R&D-generated knowledge. Somewhat surprisingly, hiring workers from others' R&D labs to one's own does not seem to be a significant spillover channel. Hiring workers previously in R&D to one's non-R&D activities, however, boosts both productivity and profitability. This is interpreted as evidence that these workers transmit knowledge that can be readily copied and implemented without much additional R&D effort. |
| Keywords: | Labor Mobility, R&D Spillovers, Profitability, Linked Employer-Employee Data |
| JEL: | D62 J24 J62 L25 O31 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2008005&r=lab |
| By: | Ryo Kambayashi |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:hst:hstdps:d07-236&r=lab |
| By: | Baas, Timo (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Brücker, Herbert (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]) |
| Abstract: | "This paper examines the macroeconomic consequences of the diversion of migration flows away from Germany towards the UK in the course of the EU Eastern Enlargement. The EU has agreed with the new member states from Central and Eastern Europe transitional periods for the free movement of workers. The selective application of migration restrictions during the transitional periods has resulted in a reversal of the pre-enlargement allocation of migration flows from the new member states across the EU: Germany as the main destination before enlargement attracts only modest immigration flows since 2004, while the UK and Ireland which have been only marginally affected by immigration prior to enlargement absorb about 60% of the inflows in the post-enlargement period. The macroeconomic effects of this diversion process is analysed in this paper on the basis of a CGE model which considers wage rigidities. We find that higher migration is associated with larger GDP and employment gains, but also with a smaller wage increase and a smaller decline of the unemployment rate. The diversion of migration flows away from Germany towards the UK yields thus a higher GDP and employment growth in the UK. The joint GDP of Germany and the UK declines by 0.1 per cent as a consequence of the migration restrictions." (author's abstract, IAB-Doku) ((en)) |
| JEL: | F15 F22 C68 J61 J30 |
| Date: | 2008–01–28 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:200803&r=lab |
| By: | Ours, J.C. van; Veenman, J.M.C. (Tilburg University, Center for Economic Research) |
| Abstract: | The allocation of Moluccan immigrants across towns and villages at arrival in the Netherlands and the subsequent formation of interethnic marriages resemble a natural experiment. The exogenous variation in marriage formation allows us to estimate the causal effect of interethnic marriages on the educational attainment of children from such marriages. We find that children from Moluccan fathers and native mothers have a higher educational attainment than children from ethnic homogeneous Moluccan couples or children from a Moluccan mother and a native father. |
| Keywords: | Interethnic marriages;educational attainment |
| JEL: | I21 J15 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:20087&r=lab |
| By: | Gulumser, Aliye Ahu (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Baycan Levent, Tuzin; Nijkamp, Peter |
| Abstract: | In recent years, several countries have emphasized the importance of employment in rural areas by setting up schemes for strategic priorities and financial resources for rural development. Currently, many countries regard self-employment in rural areas as the key element of rural development. This in contrast to the past, where agriculture was the only employment resource in rural areas; today’s rural areas have changed and offer different business opportunities not only in agriculture, but also in service sectors such as mass and small-scale tourism activities. Nevertheless, agriculture still keeps its importance in rural and national economy. Against this background, the aim of this study is to evaluate rural self-employment in the EU countries, while comparing Turkey’s self- employment with data on EU member states. The study focuses on self-employment trends in agriculture sector on the basis of changing motivations and participations of males and females. The data and information used for comparison and evaluation are based on Eurostat and Turkstat data. The results of our study show that agricultural employment and self-employment exhibit a slight decrease over time and that the impact of this decrease in male and female employment differs among countries in Europe. The results of our study show also that the motivation of Turkish women towards self-employment is higher than that of European women and of Turkish men. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:vuarem:2007-17&r=lab |
| By: | Robert Kaestner; Michael Grossman |
| Abstract: | In this paper, we investigate the association between weight and children's educational achievement, as measured by scores on Peabody Individual Achievement Tests in math and reading, and grade attainment. Data for the study came from the 1979 cohort of the National Longitudinal Survey of Youth (NLSY), which contains a large, national sample of children between the ages of 5 and 12. We obtained estimates of the association between weight and achievement using several regression model specifications that controlled for a variety of observed characteristics of the child and his or her mother, and time-invariant characteristics of the child. Our results suggest that, in general, children who are overweight or obese have achievement test scores that are about the same as children with average weight. |
| JEL: | I12 I20 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13764&r=lab |
| By: | K. SUNDARAM (Department of Economics, Delhi School of Economics, Delhi, India) |
| Abstract: | This paper presents some results from the NSS 61st Round Employment – Unemployment Survey, 2004-05 on the issue of fair access to social groups and religion-based population categories. The issue is whether and the extent to which the population of say, the OBCs or the Muslims (in the relevant age-group and with the qualifying level of education) is under-represented in enrollments in higher education. The answer involves (for each population category and relevant age-group) a comparison of (i) their share among those with the qualifying level of education with (ii) their share among those with the qualifying level of education and currently attending institutions for under-graduate/post-graduate studies. At the all-India level, despite a sharp rise in the share of OBCs in the total population, the extent of their under-representation in under-graduate enrollments is just 2.5 percent – down from 3.5 percent in 1999-2000 – in rural India. In urban India, the extent of OBC under-representation in under-graduate enrollments, though marginally higher than in 1999-2000, is still less than 2.0 per cent. In respect of post-graduate enrollments, the OBCs, are significantly (by nearly 4 percentage points) over-represented in rural India, while in urban India, the OBC under-representation is just 0.3 percentage points. In respect of Muslims, in rural India, they are, over-represented in under-graduate enrollments and in urban-India, the extent of under-representation of Muslims is less than one percentage. Thus, for no social/religion-based population group is the extent of under-representation in enrollments in higher-education more than 2.5 percentage points. There is thus little or no case for a 27 percent reservation for OBCs in enrollments in higher education. As for the ‘Creamy Layer’ of the OBCs, there is, even less of a case for not excluding them from any regime of quotas for the OBCs in higher education. |
| Keywords: | India, Social & Religion-based Groups, Caste-based Reservations, Fair Access to Higher Education, Creamy layer. |
| JEL: | I28 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:cde:cdewps:163&r=lab |
| By: | O'Higgins, Niall (University of Salerno); D'Amato, Marcello (University of Salerno); Caroleo, Floro Ernesto (University of Naples, Parthenope); Barone, Adriana (University of Salerno) |
| Abstract: | The aim of the present paper is to gain some insight into the causes of dropping out of school and, more generally, of the factors that induce parents to review their choices about their child’s schooling careers. To this end we apply to data from a school dropout survey insights from a model of sequential decision making by parents, where the initial decision can be reviewed in the light of new information emerging about the ability and opportunities of the child in benefitting from education relative to her outside (in the unskilled market). Analysis of the data confirms the role of both economic capacity (opportunity costs) and cultural capacity (ability to disentangle signals about future opportunities) of the family of origin shape observed choices about drop-out and return to school by individuals in our sample. Dropping out behaviour also appears to be strongly influenced by mismatches between school and student, however, and many of those who leave are not “gone for good”. |
| Keywords: | human capital, school dropout, young people |
| JEL: | I21 J13 J24 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3292&r=lab |
| By: | Baucells, Manel (IESE Business School); Sarin, Rakesh K. (UCLA Anderson School of Management) |
| Abstract: | We consider a resource allocation problem in which time is the principal resource. Utility is derived from time-consuming leisure activities, as well as from consumption. To acquire consumption, time needs to be allocated to income generating activities (i.e., work). Leisure (e.g., social relationships, family and rest) is considered a basic good, and its utility is evaluated using the Discounted Utility Model. Consumption is adaptive and its utility is evaluated using a reference-dependent model. Key empirical findings in the happiness literature can be explained by our time allocation model. Further, we examine the impact of projection bias on time allocation between work and leisure. Projection bias causes individuals to overrate the utility derived from income; consequently, individuals may allocate more than the optimal time to work. This misallocation may produce a scenario in which a higher wage rate results in a lower total utility. |
| Keywords: | Life satisfaction; Work; Leisure; Social comparison; Adaptation; |
| Date: | 2007–09–09 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0710&r=lab |
| By: | Musgrave, Ralph S. |
| Abstract: | Since 2002, the British Government department responsible for immigration, the Home Office, has claimed immigrants pay £2-5bn more in tax than they withdraw from the public purse. The workings behind this figure omit the cost of the additional infrastructure investments that immigrants necessitate (no small omission). The conventional wisdom is that funding government owned assets is a burden on the community at large, whereas funding private sector business assets is not. However the distinction between public and private sectors is artificial. Thus funding the private sector investments is just as much a burden on the community as funding the public sector. Thus it is the community at large funds the additional private sector business assets that immigrants necessitate. The important distinction is not between public and private sector assets, but between what might be called “communally used” assets (public and private) and assets which only one person or family benefits from, of which housing is much the most important. That is, the community at large does not pay for immigrants’ housing: immigrants themselves do. Assets other than housing in the UK amount to about £30,000 per head. The investment burden on the community is around double this because the typical immigrant has one child shortly after arriving. Immigrants do eventually pay this back – after about a generation. But by that time interest on the debt (which is not paid back) resembles the debt itself. Having arrived at a figure for the investment burden that immigrants impose, there is then the question as to what effect this has on the overall contribution that immigrants make, or burden that they impose. Answering this question involves answering a number of subsidiary questions about what can and cannot be debited to immigration. The four main subsidiary questions are thus. 1. Should the cost of educating immigrants’ children (£7.6bn a year) be attributed to immigration? The Home Office, Migrationwatch and others have disagreed on this for some time. It is shown that Migrationwatch is right: these educational costs should be attributed to immigration. 2. In past years, some Government current spending (as opposed to capital spending) was financed by increasing the national debt. Are immigrants (who have not benefited from this spending) effectively paying interest on this part of the national debt? If so, this would be unfair. It is shown that immigrants are not in fact paying for this past current spending. 3. Several studies have recently claimed that immigrants reduce interest rates. These studies all make the same mistake: they assume that interest rate reductions are the only weapon that governments have to raise demand with a view to employing extra workers (immigrants). In fact it is an expansion of the monetary base over the decades and centuries which has created the extra demand that immigrants necessitate. Moreover, interest rates have to rise a finite amount in reaction to immigration because someone somewhere has to forgo consumption to fund the additional investments that immigrants necessitate. 4. Do remittances reduce real incomes for natives? It is concluded that they do. The final figure for the cost imposed on UK natives by immigrants (about £12bn a year) is tentative, first because quantifying the variables that produce the £12bn is more informed guesswork than accurate measurement. Second, some of the official figures on which the estimate is based could be inaccurate. For example, there is evidence that the official figure for the total value of all assets in the UK could have been underestimated by 100% or more; and the real figure for remittances could conceivably be ten times the official figure. In short the cost imposed on UK natives by immigrants could easily be half or double the above £12bn. |
| Keywords: | Immigration; infrastructure; cost; Musgrave; Migrationwatch; IPPR; Home Office; immigrants; migration; education; children; interest rates; remittances. |
| JEL: | F22 J61 E4 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:6869&r=lab |
| By: | Carmen Pagés-Serra (Inter-American Development Bank); Alejandro Micco (Central Bank of Chile) |
| Abstract: | This paper examines the economic effects of employment protection legislation in a sample of developed and developing countries. Implementing a difference-in-differences test lessens the potentially severe endogeneity and omitted variable problems associated with cross-country regressions. This test is based on the hypothesis that employment protection regulations are more binding in sectors of activity exposed to higher volatility in demand or supply shocks. The analysis indicates that more stringent legislation slows down job turnover by a significant amount, and that this effect is more pronounced in sectors that are intrinsically more volatile. The paper also finds that employment and value added decline in the most affected sectors, and employment and output effects are driven by a decline in the net entry of firms. In contrast, average employment per plant is not significantly affected. |
| Keywords: | Employment Protection Legislation, Employment Reallocation, Gross Job Flows, Employment, Firm Entry and Exit |
| JEL: | J23 J32 J63 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:idb:wpaper:1077&r=lab |
| By: | Klaus Bettina (METEOR) |
| Abstract: | We consider one-to-one matching markets in which agents can either be matched as pairs or remain single. In these so-called roommate markets agents are consumers and resources at the same time. We investigate two new properties that capture the effect a newcomer has on incumbent agents. Competition sensitivity focuses on the newcomer as additional consumer and requires that some incumbents will suffer if competition is caused by a newcomer. Resource sensitivity focuses on the newcomer as additional resource and requires that this is beneficial for some incumbents. For solvable roommate markets, we provide the first characterizations of the core using either competition or resource sensitivity. On the class of all roommate markets, we obtain two associated impossibility results. |
| Keywords: | microeconomics ; |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2007046&r=lab |
| By: | Mohnen, Alwine (University of Cologne); Pokorny, Kathrin (University of Cologne); Sliwka, Dirk (University of Cologne) |
| Abstract: | We provide an explanation for peer pressure in teams based on inequity aversion. Analyzing a two-period model with two agents, we find that the effect of inequity aversion strongly depends on the information structure. When contributions are unobservable, agents act as if they were purely selfish. However, when contributions are made transparent at an interim stage, agents exert higher efforts in the first period and adjust their efforts according to the interim information in the second period. This form of peer pressure reduces free-riding and thus, more efficient outcomes are attained. The results are confirmed in a real effort experiment. |
| Keywords: | inequity aversion, incentives, free-riding, peer pressure, transparency, team, real effort, experiment |
| JEL: | D23 M12 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3281&r=lab |
| By: | Robert Cassen; Geeta Gandhi Kingdon |
| Abstract: | Tens of thousands of young people leave school with no or very few qualifications in England. This paper seeks to build a fuller picture of Key Stage 4 low achievement and its correlates than available hitherto. We focus on three aspects. Firstly, the role of students' personal characteristics, especially gender, ethnicity and past achievement, in explaining the incidence of low achievement at age 16. Secondly, we investigate the extent to which particular personal characteristics constitute direct risk factors for low achievement and the extent to which they lead to low achievement because of their correlation with unobserved school and neighborhood quality, i.e. the role of sorting into schools and neighborhoods of different quality. We suggest a method of calculating school quality (how effective a school is in helping its pupils to avoid low achievement) which is akin to the value-added concept, and examine which specific observed school characteristics predict this measure of 'school quality'. Thirdly, the paper examines the relationship between school resources - particularly per pupil expenditure - and the avoidance of low achievement, exploiting the panel nature of the National Pupil Database. Going beyond simple discrete choice models, the paper employs school fixed effects regression to reduce endogeneity problems and employs panel data at the student level to analyse school resource effects. A number of interesting findings emerge about the correlates of low achievement and of school quality, and we consider the policy implications of our findings. |
| Keywords: | Low achievement, school fixed effects, panel data, school resources, England |
| JEL: | I21 I28 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sticas:/118&r=lab |
| By: | O Debande; Vincent Vandenberghe |
| Abstract: | The arguments for refinancing the European Union's (EU) higher education via higher tuition fees largely rest on preserving the profitability of the educational investment and offering deferred and income-contingent payments. Using income survey datasets on Belgium, Germany and the United Kingdom (UK) we first estimate how graduates' private return on educational investment is likely to be affected by higher private contributions. We then evaluate the effect of income-contingent and deferred payment mechanisms on lifetime net income and its capacity to account for graduates' ability to pay, considering numerous ways of financing the cost of introducing income-contingency. Our analysis reveals that increasing individuals' contributions to higher education costs, through income-contingent and deferred instruments, does not significantly affect the private rate of return of heterogeneous graduates, allows for payments to be indexed to ability to pay, and can be implemented in ways that minimize the risk of adverse selection. These findings prove robust to significant variations between countries' unharmonised higher education institutional structures. |
| Keywords: | Higher Education Finance, income-contingent loans, risk pooling and risk shifting |
| JEL: | I28 H52 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sticas:/124&r=lab |