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on Labour Economics |
| By: | Paolo Ghinetti; Claudio Lucifora (SEMEQ Department - Faculty of Economics - University of Eastern Piedmont) |
| Abstract: | In this study, we investigate public-private pay determination using French, British and Italian micro data from the 2001 ECHP. We document that the distribution of wages is very different between public and private workers. As a result, the public pay premium varies as one moves up or down in the wage distribution. In France, Great Britain and Italy the public sector wage premium is higher for low skilled public sector workers, whilst the opposite happens for high skilled workers. These effects are more pronounced in the service sector. Additional results suggest that if a worker with certain characteristics was exogenously moved from the public to the private sector, he suffered a welfare (wage) loss, which is higher for the low skilled, who are the most protected in the public sector. In the light of the privatisation process of formerly public service, this process may in general impose some cost to involved public employees. Moreover, such costs are decreasing with the level of wages. Finally, the magnitude of these costs depend on the country considered, and, hence on the associated institutional setting. |
| Keywords: | Wage differentials, Public sector, Quantile regression |
| JEL: | J31 J45 C14 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:upo:upopwp:118&r=lab |
| By: | Gürtzgen, Nicole |
| Abstract: | Using a large linked employer-employee data set, this paper presents new evidence on the wage premium under collective bargaining contracts in western and eastern Germany. The novel feature of our analysis is that we use a longitudinal data set. In contrast to previous studies, we seek to assess the extent to which differences in wages between workers in covered and uncovered firms arise from the non-random selection of workers and firms into the different regimes. By measuring the relative wage gains or losses of workers employed in firms that change contract status, we obtain estimates that depart considerably from previous results relying on cross-sectional data. Industrylevel contracts in western Germany and firm-level contracts in eastern Germany are associated with a small, but statistically significant average wage premium of about 2 per cent. Finally, results from a trend-adjusted differencein - difference approach indicate that the industry-level wage premium in western Germany might be downward biased and the firm-level premium in eastern Germany might still be upward biased, once differences in pre-transition wage growth are accounted for. |
| Keywords: | Union Wage Premium, Collective Bargaining Coverage |
| JEL: | J31 J51 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7193&r=lab |
| By: | Kaas, Leo (University of Konstanz); Madden, Paul (University of Manchester) |
| Abstract: | Two firms choose locations (non-wage job characteristics) on the interval [0,1] prior to announcing wages at which they employ workers who are uniformly distributed; the (constant) marginal revenue products of workers may differ. Subgame perfect equilibria of the two-stage location-wage game are studied under laissez-faire and under a minimum wage regime. Up to a restriction for the existence of pure strategy equilibria, the imposition of a minimum wage is always welfare-improving because of its effect on non-wage job characteristics. |
| Keywords: | hotelling, duopsony, minimum wages |
| JEL: | D43 E24 J48 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3434&r=lab |
| By: | Peter Arcidiacono; Patrick Bayer; Aurel Hizmo |
| Abstract: | In traditional signaling models, education provides a way for individuals to sort themselves by ability. Employers in turn use education to statistically discriminate, paying wages that reflect the average productivity of workers with the same given level of education. In this paper, we provide evidence that education (specifically, attending college) plays a much more direct role in revealing ability to the labor market. We use the NLSY79 to examine returns to ability early in careers; our results suggest that ability is observed nearly perfectly for college graduates but is revealed to the labor market much more gradually for high school graduates. As a result, from very beginning of the career, college graduates are paid in accordance with their own ability, while the wages of high school graduates are initially completely unrelated to their own ability. This view of ability revelation in the labor market has considerable power in explaining racial differences in wages, education, and the returns to ability. In particular, we find no racial differences in wages or returns to ability in the college labor market, but a 6-10 percent wage penalty for blacks (conditional on ability) in the high school market. These results are consistent with the notion that employers use race to statistically discriminate in the high school market but have no need to do so in the college market. That blacks face a wage penalty in the high school but not the college labor market also helps to explains why, conditional on ability, blacks are more likely to earn a college degree, a fact that has been documented in the literature but for which a full explanation has yet to emerge. |
| JEL: | J15 J24 J3 J7 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13951&r=lab |
| By: | Pedro S. Martins |
| Abstract: | Using matched employer-employee panel data, we estimate measures of pay dispersion per firm-year that take into account both rm and worker unobserved heterogeneity. Unlike research that controls only for differences in observables, we nd that within-firm pay inequality is significantly associated to lower firm performance. |
| Keywords: | Wage policies, Worker heterogeneity, Fairness |
| JEL: | M52 J31 D24 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:cgs:wpaper:8&r=lab |
| By: | Corrado Andini (University of Madeira, CEEAplA and IZA) |
| Abstract: | This paper provides further evidence on the positive impact of schooling on within-groups wage dispersion in Portugal, using data on male workers from the 2001 wave of the European Community Household Panel. The issue of schooling endogeneity is taken into account by using the newest available instrumental-variable technique for quantile regression, i.e. the control-function estimator due to Lee (forthcoming, 2007). The findings are compared with earlier results based on different techniques, i.e. the instrumental-variable estimator due to Arias, Hallock and Sosa-Escudero (2001) and the standard exogeneitybased estimator due to Koenker and Bassett (1978). |
| Keywords: | endogeneity, quantile regression, schooling, wage inequality |
| JEL: | I21 J31 C29 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2828&r=lab |
| By: | Baltagi, Badi H. (Syracuse University); Blien, Uwe (IAB, Nürnberg); Wolf, Katja (IAB, Nürnberg) |
| Abstract: | In 1994, Blanchflower and Oswald reported that they have found an ‘empirical law of economics’ – the Wage Curve. According to their empirical results, the elasticity of wages with respect to regional unemployment is -0.1. This holds especially for the Anglo-Saxon countries. Our paper reconsiders the western German Wage Curve using disaggregated regional data and is based on a random sample of 974,179 employees drawn from the employment statistics of the Federal Employment Services of Germany (Bundesagentur für Arbeit) over the period 1980-2004. We find that the wage equation is highly autoregressive but far from unit root. This means that this wage equation is not a pure Phillips curve, nor a static Wage Curve, and one should account for wage dynamics. The unemployment elasticity is significant but relatively small: only between -0.02 and -0.04. We also check the sensitivity of this wage elasticity for different population groups (young versus old, men versus women, less educated versus highly educated, German native versus foreigner). We confirm that the wage elasticity is more flexible the weaker the bargaining power of the particular group. |
| Keywords: | wage curve, regional labour markets, Phillips curve |
| JEL: | J30 C23 R10 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3433&r=lab |
| By: | Andreas Kuhn; Oliver Ruf |
| Abstract: | This paper deals with the compensation for non-fatal accident risk in Switzerland and presents empirical estimates of the value of a statistical injury. We approach the problem of endogenous sorting of workers into jobs with different accident risks based on unobserved productivity differences twofold. First, we have access to the number of accidents not only at the level of industries, but within cells defined over industry x skill-level of the job, which allows us to estimate risk compensation within groups of workers defined over the same cells. Second, we capitalize on the partial panel structure of our data which allows us to empirically isolate the wage component specific to the employer. Our different approaches to identification in fact yield very different estimates of the value of a statistical injury. Our preferred estimate gives an estimate of about 40,000 Swiss francs (per prevented injury per year). |
| Keywords: | Compensating Wage Differentials, Value of a Statistical Injury, Risk Measurement, Unobserved Productivity |
| JEL: | J31 J17 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:367&r=lab |
| By: | Olivier Thévenon |
| Abstract: | The aim of this paper is to identify how specific the increase of female labour market participation observed over the last fifteen years were to particular family statuses: mothers versus childless women, households with young children versus households with older children, mothers who had children early versus those who had children later. The analysis is based on European Union Labour Force Surveys (EU LFS) for the period from 1992 to 2005 and draws on the data available for some countries on household composition, and observes different cohorts of women across the different years of the survey. The labour market situations of women are modelled in order to identify trends in behaviour for given individual and family characteristics. The results are used to discuss the variety of changes in female labour market behaviour in group of countries that were considered as relatively similar at the beginning of the 90s. We find that changes were mainly favourable to mothers in Belgium, Spain, Portugal, Poland, the Netherlands and the UK. Some similarities and differences between countries identified in previous comparative research are reaffirmed, confirming the relative heterogeneity of the models of female employment in relation to standard welfare state typologies. Major differences and trends specific to certain countries were nevertheless identified. Some of these differences concern the relative importance of the number of children and of the age of the youngest on female labour market behaviour. But differences also relate to the variable impact of the age at which women have their first child. It suggests that varieties in macro-institutional contexts shape different opportunity for women to manage labour market commitment with family formation over their life-cycle. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2008-1&r=lab |
| By: | Mirko Abbritti (Graduate Institute of International Studies, Geneva); Andrea Boitani (DISCE, Università Cattolica, Milan); Mirella Damiani (Università di Perugia) |
| Abstract: | The dynamic general equilibrium model with hiring costs presented in this paper delivers involuntary unemployment in the steady state as well as involuntary fluctuations in unemployment. The existence of hiring friction introduces externalities that, in turn, entail the breakdown of the "divine coincidence" without assuming real wage rigidity. Our model with labour market imperfections outperforms the standard NK model as for the persistence of responses to monetary shocks. The model also allows for an analysis of the volatility of economies, differing in their "degrees of labour market rigidity". It turns out that "rigid" economies exhibit less unemployment volatility and more inflation volatility than "flexible" economies. |
| Keywords: | Hiring Costs, Wage Bargaining, Output Gap, New Keynesian Phillips Curve |
| JEL: | E24 E31 E32 E52 J64 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie3:ief0078&r=lab |
| By: | Karlström, Anders (Systems Analysis and Economics, Royal Institute of Technology); Palme, Mårten (Dept. of Economics, Stockholm University); Svensson, Ingemar (Social Insurance Agency) |
| Abstract: | We study the effect of a reform of the Swedish disability insurance (DI) program whereby the special eligibility rules for workers in the age group 60 to 64 were abolished. First, we use a differences-in-differences approach to study changes in the disability take-up as compared to the age group 55 to 59. Then, we use a similar approach to study to what extent the employment effect of the reform is "crowded out" by an increase in the utilization of the sickpay insurance (SI) and/or the unemployment insurance (UI). In an extended analysis, we study the effect of firm closure on employment and the utilization of different labor market insurance programs in different age groups before and after the reform. |
| Keywords: | Disability Insurance; Early Retirement |
| JEL: | H53 H55 H59 J21 J26 |
| Date: | 2008–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sunrpe:2008_0003&r=lab |
| By: | Bourdet , Yves (Department of Economics, Lund University); Persson, Inga (Department of Economics, Lund University) |
| Abstract: | In this paper we analyse the changes that have taken place on the supply and demand sides of the Swedish labour market during recent decades, with particular focus on youths and the extent to which Swedish youths have become “overeducated”. We first provide an overview of theoretical and measurement issues related to the concept of overeducation. Against this background we then survey some of the findings from earlier studies of the evolution of the demand and supply of skills in Sweden and of the extent and character of over- and undereducation. We then look specifically at overeducation among Swedish youths during their labour market entrance and early career and discuss the main issues related to overeducation that have been raised in the Swedish public debate. |
| Keywords: | Overeducation; mismatch; wage-premium; youth employment; Sweden |
| JEL: | J21 J24 J31 |
| Date: | 2008–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2008_008&r=lab |
| By: | Blanchflower, David G. (Bank of England); Bryson, Alex (Policy Studies Institute) |
| Abstract: | This paper investigates the demise of unionisation in British private sector workplaces over the last quarter century. We show that dramatic union decline has occurred across all types of workplace. Although the union wage premium persists it is quite small in 2004. Negative union effects on employment growth and financial performance are largely confined to the 1980s. Managerial perceptions of the climate of relations between managers and workers have deteriorated since the early 1980s across the whole private sector, whether the workplace is unionised or not. |
| Keywords: | trade unions, wages, employment growth, financial performance |
| JEL: | J51 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3436&r=lab |
| By: | Oliver Ruf |
| Abstract: | This paper analyzes labor market success of workers who are displaced in boom versus recession periods. Moreover, the empirical analysis contrasts workers from small firms and large firms. The idea is that displacement carries no information about workers' productivity in large firms but is a signal of low productivity in small firms. This signal is stronger when the plant closure occurs in a boom period than in a recession period. Results indicate that the (i) state of the business cycle is important for influence the effect of displacement on labor market success and (ii) the effect differs by the size of the firm. In large firms, displaced workers suffer from larger earning losses when displacement occurs in recession compared to boom, the opposite result is found for workers displaced from small firms. |
| Keywords: | Displaced workers, wage losses, business cycle, size of the firm |
| JEL: | E32 J64 J65 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:366&r=lab |
| By: | Malamud, Ofer (University of Chicago); Wozniak, Abigail (University of Notre Dame) |
| Abstract: | College-educated workers are twice as likely as high school graduates to make lasting long-distance moves, but little is known about the role of college itself in determining geographic mobility. Unobservable characteristics related to selection into college might also drive the relationship between college education and geographic mobility. We explore this question using a number of methods to analyze both the 1980 Census and longitudinal sources. We conclude that the causal impact of college completion on subsequent mobility is large. We introduce new instrumental variables that allow us to identify educational attainment and veteran status separately in a sample of men whose college decisions were exogenously influenced by their draft risk during the Vietnam War. Our preferred IV estimates imply that graduation increases the probability that a man resides outside his birth state by approximately 35 percentage points, a magnitude nearly twice as large as the OLS migration differential between college and high school graduates. IV estimates of graduation’s impact on total distance moved are even larger, with IV estimates that exceed OLS considerably. We provide evidence from the National Longitudinal Survey of Youth (NLSY) 1979 that our large IV estimates are plausible and likely explained by heterogeneous treatment effects. Finally, we provide some suggestive evidence on the mechanisms driving the relationship between college completion and mobility. |
| Keywords: | geographic mobility, education, college graduates, internal migration, instrumental variables |
| JEL: | J61 J24 I23 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3432&r=lab |
| By: | Pedro S. Martins; Jim Jin |
| Abstract: | Do workers benefit from the education of their co-workers? We examine this question first by introducing a model of learning, which argues that educated workers may transfer part of their general skills to uneducated workers, and then by examining detailed matched employeremployee panel data from Portugal. We find evidence of large firm-level social returns (between 14% and 23%), much larger than standard estimates of private returns, and of significant returns accruing to less educated workers but not to their more educated colleagues. |
| Keywords: | Education Spillovers, Matched Employer-Employee Data, Endogenous Growth |
| JEL: | J24 J31 I20 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:cgs:wpaper:9&r=lab |
| By: | Krug, Gerhard (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Dietz, Martin (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Ullrich, Britta (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]) |
| Abstract: | "In this paper we show that firm characteristics have an influence on the success of employment subsidies e.g. wage subsidies and in-work benefits, as they can strengthen positive effects or mitigate negative effects. We consider firm characteristics as post treatment variables, which are realised after the (placement officer's or the unemployed job seeker's) decision regarding programme participation has taken place. Therefore in a first step we estimate pairwise treatment effects by propensity score matching, controlling for pre-treatment characteristics of the treated and control individuals only. In a second step as a methodological contribution we propose a decomposition of the pairwise treatment effects using an Oaxaca/Blinder style decomposition analysis on the matched samples. In this decomposition we include the post-treatment firm characteristics as explanatory variables. Because employment status is a binary outcome variable in our empirical application, we use a generalisation of the decomposition analysis to nonlinear regressions developed by Fairlie (2005). This procedure allows us to distinguish between the part of a treatment effect that is due to differences in firm characteristics between treated and controls (the 'explained' part) and the part that is independent of those differences (the 'unexplained' part)." (author's abstract, IAB-Doku) ((en)) |
| JEL: | J38 C25 C14 |
| Date: | 2008–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:200818&r=lab |
| By: | Anneleen Peeters |
| Abstract: | This paper focuses on the construction of a leading indicator for the Belgian labour market based on labour market variables. It is shown that our employment indicator constructed from monthly data on interim work and business failures: (1) resembles quite well the cyclical pattern of observed employment in Belgium; (2) performs not significantly better when product market variables are added; (3) is a better predictor of the cycles in the labour market compared to existing leading indicators for the product market. Furthermore, it was found that even more accurate forecasts of future employment could be derived if information on the past behaviour of total employment (captured by an AR(2)-process) was added to our constructed leading indicator. But this last specification loses its leading character due to long publication delays for the employment data. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces9823&r=lab |
| By: | Behncke, Stefanie (University of St. Gallen); Frölich, Markus (University of Mannheim); Lechner, Michael (University of St. Gallen) |
| Abstract: | This paper examines whether the chances of job placements improve if unemployed persons are counselled by caseworkers who belong to the same social group, defined by gender, age, education, and nationality. Based on an unusually informative dataset, which links Swiss unemployed to their caseworkers, we find positive employment effects of about 4 percentage points if caseworker and unemployed belong to the same social group. Coincidence in a single characteristic, e.g. same gender of caseworker and unemployed, does not lead to detectable effects on employment. These results, obtained by statistical matching methods, are confirmed by several robustness checks. |
| Keywords: | social identity, social interactions, public employment services, unemployment, gender, age, education, treatment effects, matching estimators |
| JEL: | J64 J68 C31 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3437&r=lab |
| By: | Stefanie Behncke; Markus Frölich; Michael Lechner |
| Abstract: | This paper examines whether the chances of job placements improve if unemployed persons are counselled by caseworkers who belong to the same social group, defined by gender, age, education, and nationality. Based on an unusually informative dataset, which links Swiss unemployed to their caseworkers, we find positive employment effects of about 4 percentage points if caseworker and unemployed belong to the same social group. Coincidence in a single characteristic, e.g. same gender of caseworker and unemployed, does not lead to detectable effects on employment. These results, obtained by statistical matching methods, are confirmed by several robustness checks. |
| Keywords: | Social identity, social interactions, public employment services, unemployment, gender, age, education, treatment effects, matching estimators |
| JEL: | J64 J68 C31 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:usg:dp2008:2008-08&r=lab |
| By: | Wasim, Mohammad Pervez; Herani, Gobind M.; Farooqui, Wahid; Qureshi, M. A |
| Abstract: | The development of a society is virtually dependent upon the quality of human resources both male and female, the changing pattern of economic and social development of world societies irrespective of their level of development, necessitates and equal advancement of both the social segments. The numerical reality that women constitute about nearly half of the total population of Sindh ideally assigns to them equal participating role in the economic life of the province. However, like other developing countries, women’s role in Sindh as an active worker-producer of goods and services has not been duly recognized by this male dominated society. With the objective of ensuring increased participation of women, clear-cut guidelines about integrating women in the development process and defining their roles are still lacking in Sindh. The present study is a step in the direction of bridging the gap of information about female labor force participation of Sindh in different, activity rates, industry group, occupation group and employment status in 1981 and 1998 population census. The most important conclusion that emerges from this study is that though percentage of women labor force in different, activities, industry group, occupation group and employment status has mostly increased in 1998 as compared to 1981, but being nearly half of the population this increase is still very low. |
| Keywords: | Family; Authority; Problems; Female; Labor Force; Sindh |
| JEL: | J21 J71 J12 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8292&r=lab |
| By: | Falk, Armin (University of Bonn); Huffman, David (Swarthmore College); MacLeod, W. Bentley (Columbia University) |
| Abstract: | We provide evidence on how two important types of institutions – dismissal barriers, and bonus pay – affect contract enforcement behavior in a market with incomplete contracts and repeated interactions. Dismissal barriers are shown to have a strong negative impact on worker performance, and market efficiency, by interfering with firms' use of firing threat as an incentive device. Dismissal barriers also distort the dynamics of worker effort levels over time, cause firms to rely more on the spot market for labor, and create a distribution of relationship lengths in the market that is more extreme, with more very short and more very long relationships. The introduction of a bonus pay option dramatically changes the market outcome. Firms are observed to substitute bonus pay for threat of firing as an incentive device, almost entirely offsetting the negative incentive and efficiency effects of dismissal barriers. Nevertheless, contract enforcement behavior remains fundamentally changed, because the option to pay bonuses causes firms to rely less on long-term relationships. Our results show that market outcomes are the result of a complex interplay between contract enforcement policies and the institutions in which they are embedded. |
| Keywords: | employment protection, efficiency wages, bonus pay, incomplete contracts, firing costs, experiment |
| JEL: | J41 J3 C9 D01 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3435&r=lab |
| By: | Erixon, Lennart (Dept. of Economics, Stockholm University) |
| Abstract: | A Swedish economic policy was developed by two trade union economists shortly after the Second World War. The Rehn-Meidner model recommends the use of selective employment policy measures, a tight macroeconomic policy and a wage policy of solidarity to combine full employment and equity with price stability and economic growth. Although never consistently applied in Sweden, it is possible to distinguish a golden age for the Rehn-Meidner model from the late 1950s to the early 1970s. In the 1970s and 1980s, Swedish governments abandoned the restrictive macroeconomic means of the Rehn-Meidner programme and decentralised wage bargaining obstructed the wage policy of solidarity. In the 1990s and 2000s a new economic-policy regime could not meet the strong requirement of full employment in the Rehn-Meidner model but it satisfied the model’s priority of selective employment policy within the framework of a restrictive macroeconomic policy. |
| Keywords: | Swedish model; Rehn-Meidner model; third way; labour market policy; wage policy; productivity growth; fiscal policy; unemployment; inflation |
| JEL: | E24 E31 E62 J23 J31 J62 O23 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sunrpe:2008_0002&r=lab |
| By: | Fenella Fleischmann; Jaap Dronkers |
| Abstract: | In this article, we analyse four different dimensions of socio-economic integration of 1st and 2nd generation immigrants into the labour markets of 13 EU countries and we assess, taking into account a number of individual characteristics, the effects of the countries of origin and the countries of destination on this integration. We find that participation in the labour market, unemployment, occupational status and the chances of reaching the upper middle-class are different, although inter-related, dimensions of the socio-economic integration of immigrants and they work differently for men and women. In the countries of destination, the level of employment protection legislation and the conservative welfare regime affect this integration negatively. Most indicators of national policies aimed at the integration of immigrants have no effects on the socio-economic integration of immigrants. Furthermore, we find a number of origin effects which continue to have an impact on 2nd generation immigrants. Political stability and political freedom in origin countries have positive and negative effects on socio-economic integration. The emigration rate of the origin countries has a negative effect. The higher levels of socio-economic integration amongst immigrants from other EU-countries demonstrates the functioning of the European Union as an integrated labour market .Controlling for individual religious affiliation turns out to be very useful, since we find a number of negative effects of being a Muslim, among both men and women. While individual education is an important predictor of immigrants' labour market outcomes, our findings indicate lower returns on this education in terms of occupational status, indicating a ceiling effect for highly-educated 2nd generation immigrants who cannot translate their qualifications into high-status jobs to the same extent as their native peers. |
| Keywords: | immigration, integration, labour market, European Union, social policy |
| Date: | 2007–05–25 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2007/19&r=lab |
| By: | Vodopivec, Milan (World Bank) |
| Abstract: | By simulating the working of the unemployment insurance savings accounts (UISAs) in Slovenia using a methodology similar to Feldstein and Altman (1998), the paper examines two questions: how viable is this system as an alternative to traditional unemployment insurance (UI) system, and how the redistribution of income changes if the UI system is replaced by UISAs. The simulations are performed on a representative sample of labor force participants, for which lifetime labor market histories are generated from administrative panel data. Simulations show that the UISA system is a viable alternative to a modest UI system, but that its viability is jeopardized under generous benefits. Under the modest regime (here identified with a post-1998 period, the period after the UI reform which strongly reduced the maximum potential duration of benefit, for most workers even by half) our calculations show that only one quarter of workers end their working life with negative cumulative balance and 43 percent ever experience a negative UISA balance; in contrast, under the generous regime (here identified with the pre-1998-reform period), 49 percent of workers end their working life with negative cumulative balance and 66 percent ever experience a negative balance. Moreover, under the modest benefit regime workers are better able to recover positive UISA balance. The simulations also show that the level of redistribution under the UISAs lags substantially behind the UI system, even though the version of the UISAs studied permits borrowing and hence allows for redistribution. |
| Keywords: | unemployment insurance, unemployment insurance savings accounts |
| JEL: | J65 C23 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3438&r=lab |
| By: | Filip Abraham; Joeri Van Rompuy |
| Abstract: | Summary for Economic Policy: The starting date of the European Monetary Union (EMU) is coming close. After several years of intense efforts, eleven European Union (EU) countries are prepared to go ahead. Belgium is one of those countries. This is a step of great importance. Gradually, the attention is shifting from the preparation of EMU to the question whether EMU will work. In Belgium much of this discussion focuses on the performance of the labour market. Belgium is a country with relatively high structural unemployment. The country is also confronted with a substantial regional gap in economic growth and unemployment. This diverging economic performance gives rise to politically sensitive interregional transfers between the North and the South. There is a widespread concern that the Belgian labour market will fail to cope efficiently with the need to adjust to changing economic conditions. While a macroeconomic wage restraint with respect to the major trading partners is ingrained in the so-called ‘law to safeguard the Belgian competitive position’, the country has been repeatedly urged by institutions such as the IMF and the OECD to promote wage and labour market flexibility, as well as to increase labour mobility. The prime minister, Jean-Luc Dehaene, pleaded recently for less government intervention in the wage formation process and for a greater wage differentiation that takes into account the diverging conditions that exist in various sectors of the economy. This position is shared by Karel Vinck, the head of the Flemish Employer Organisation (VEV), who views an increased role for sectoral negotiations between unions and employers as a means to achieving wage differentiation in the Belgian economy. And also Karel Boone, the president of the Belgian Employer Federation (VBO), emphasises the responsability of the sectoral level in the Belgian wage negotiations. Is this concern about insufficient labour market adjustment warranted ? The answer to this question requires a detailed understanding of the structural features in the Belgian economy. Subsequently, one must assess whether wages adjust to those economic shocks. Both issues are the focus of this study. After a theoretical discussion of the statistical framework (which can be skipped by the technically less inclined reader), the second part of this paper offers a detailed picture of changes in production that occurred in the Belgian economy during the period 1985-1995. Those production shocks were strong and, to an important degree, can be statistically decomposed in developments at the national, regional and sectoral level. Sectoral shocks are changes that are observed within the same industry in Flanders, Brussels and Wallonia but that are not shared by other sectors. Those sectoral changes are the dominant driving force in the Belgian economy. In our statistical exercise, the sectoral component explains an average of 47% of total output variation and 76% of the output changes explained by our statistical model. Even higher numbers are obtained when changes in employment and labour productivity are considered. The message is clear : the main source of differentiation in the Belgian economy is found at the sectoral level. These average figures mask a lot of interesting variation in individual industrial and service sectors. We distinguish between a small group of sectors that experience a structurally better growth performance than a group of poor performers. In between those two groups, a large number of primarily manufacturing industries are situated with a comparable growth performance. Looking at the cyclical pattern of individual sectors, there is not much evidence for very different nor for very similar sector-specific business cycles. One interesting exception is the countercyclical role of the government. Apparently, the government increases spending on public services in times of an economic slowdown. In this paper, regional shocks are defined as output developments that occur in all sectors of a specific region. We find evidence of such shocks but they are of secondary importance when compared to sectoral changes. Apparently, many of the observed regional trends are caused by developments in specific sectors that are primarily located in one region. Having said this, the well-known regional division of the Belgian economy emerges clearly from the statistical model. Flanders is characterised by a better medium-term growth performance, a different cyclical pattern and a greater similarity in regional output changes than either Brussels or Wallonia. By definition, national shocks are found in all sectors and in all regions. From 1985 to 1995 they accounted for 9% of the total output variation and for 14% of the production changes explained by our model. National factors matter mostly for a limited group of sectors including Metal Products, Construction, Other Market Services and Other Manufacturing. In an efficient labour market, we expect wage growth to reflect the dominating role of developments at the sectoral level. In the third part of the study, we found this not to be the case in the Belgian economy. While wage levels to some degree reflect long term sectoral productivity differentials, wage growth displays little differentiation across sectors. This lack of sectoral wage flexibility amplifies the impact of the production shocks on employment. Weaker sectors are faced with wage increases which they can ill afford. As a result, the employment performance gap between stronger and weaker sectors widens. In the end, the Belgian economy is faced with a substantial and widespread need for employment reallocation, for which the rigid labour market with limited labour mobility is ill prepared. A greater sectoral wage flexibility would avoid many of those problems. What about regional differentiation in wage setting ? There is no sign that Belgian wage increases are taking into account regional differences. This comes mostly at the expense of the weakest region, Wallonia, which suffers from higher unemployment than would be obtained if regional wage moderation were feasible. Quite likely, greater sectoral wage differentiation would contribute a lot to regional wage flexibility. Wherever necessary, this sectoral approach could be supplemented by greater attention to the regional dimension in wage setting. Such complementary approach would reduce the need for politically sensitive long-term interregional transfers and in this way enhance political cohesion in the country. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces9825&r=lab |
| By: | Ostrovsky, Yuri |
| Abstract: | The deterioration of immigrants' entry earnings in Canada in the past three decades has been well documented. This study provides further insights into the changing fortunes of immigrants by focusing on their earnings inequality and earnings instability. The analysis is based on a flexible econometric model that decomposes earnings inequality into current and long-term components. In addition to constructing earnings inequality and earnings instability profiles for different arrival cohorts, we also examine the underlying causes of earnings inequality, including the impact of foreign education, birthplace and the ability to speak English or French. |
| Keywords: | Labour, Ethnic diversity and immigration, Income, pensions, spending and wealth, Wages, salaries and other earnings, Immigrants and non-permanent residents, Low income and inequality |
| Date: | 2008–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:stc:stcp3e:2008309e&r=lab |
| By: | Miki Kohara (Associate Professor, Osaka School of International Public Policy (OSIPP)) |
| Abstract: | This paper examines how adult-children decide time spent providing nursing care to their parents and their working time in the market. Utilizing a unique survey containing information both on adult-children and their parents in Japan, we clarify whether or not adult-childrenfs supply of informal care would discourage their labor supply. We first find that the existence of inheritance that children expect to receive from their parents in the future is one of the important determinants of whether they provide nursing care to their parents. Controlled for this inheritance effect, childrenfs incentive to provide nursing care discourages their incentive to work, while childrenfs incentive to work does not affect their incentive to provide nursing care. The results imply that limiting access to market care services may decrease labor supply in Japan. |
| Keywords: | Long-Term care, Informal care, Within-family time transfer, Market labor supply, Exchange Motive, Micro-data, Simultaneous-Decisions, Japan. |
| JEL: | J22 J14 I18 C31 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:osp:wpaper:08j006&r=lab |
| By: | Cörvers Frank; Meriküll Jaanika (ROA rm) |
| Abstract: | This paper analyzes the occupational structures of 25 European Union countries during the period 2000-2004. Shift-share analyses have been used to decompose cross-country differences in occupational structure into within industry and between industry effects. The static analysis for 2004 shows that the new Member States employ a lower share of skilled workers because their industry structure is biased towards less skill-intensive industries and because they use fewer skills within industries. The differences in the shares of (high-skilled) non-production workers are dominated by the between (industrial) effect. In contrast, the dynamic analysis of 2000-2004 shows that changes in the share of high-skilled non-production workers are mostly driven by within industry changes, which are probably related to skill-biased technological change. The results indicate the weakening of this process, at least for non-production workers. The diffusion of the increased demand for skills within sectors is witnessed for the higher income EU12 country group, but less strongly for the EU25 country group. |
| Keywords: | education, training and the labour market; |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umaror:2008002&r=lab |
| By: | Parey, Matthias (University College London); Waldinger, Fabian (CEP, London School of Economics) |
| Abstract: | We investigate the effect of studying abroad on international labor market mobility later in life for university graduates. As a source of identifying variation, we exploit the introduction and expansion of the European ERASMUS student exchange program, which significantly increases a student’s probability of studying abroad. Using an Instrument Variable approach we control for unobserved heterogeneity between individuals who studied abroad and those who did not. Our results indicate that student exchange mobility is an important determinant of later international labor market mobility: We find that studying abroad increases an individual’s probability of working in a foreign country by about 15 to 20 percentage points, suggesting that study abroad spells are an important channel to later migration. We investigate heterogeneity in returns and find that studying abroad has a stronger effect for credit constrained students. Furthermore, we suggest mechanisms through which the effect of studying abroad may operate. Our results are robust to a number of specification checks. |
| Keywords: | international mobility, migration, student exchange, education |
| JEL: | J61 I2 F22 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3430&r=lab |
| By: | Keith Finlay |
| Abstract: | Since 1997, states have begun to make criminal history records publicly available over the Internet. This paper exploits this previously unexamined variation to identify the effect of expanded employer access to criminal history data on the labor market outcomes of ex-offenders and non-offenders. Employers express a strong aversion to hiring ex-offenders, but there is likely asymmetric information about criminal records. Wider availability of criminal history records should adversely affect the labor market outcomes of ex-offenders. A model of statistical discrimination also predicts that non-offenders from groups with high rates of criminal offense should have improved labor market outcomes when criminal history records become more accessible. This paper tests these hypotheses with criminal and labor market histories from the 1997 cohort of the National Longitudinal Survey of Youth. I find evidence that labor market outcomes are worse for ex-offenders once state criminal history records become available over the Internet, and somewhat weaker evidence that outcomes are better for non-offenders from highly offending groups. Results for ex-offenders demonstrate the presence of imperfect information about criminal records by employers. The non-offender results are consistent with statistical discrimination by employers. Estimates may be confounded by a short sample period and ongoing human capital investments, but the research design provides a unique setting for testing theories of statistical discrimination. |
| JEL: | D82 D83 J71 J78 K42 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13935&r=lab |
| By: | JULIO ORLANDO DE CASTRO (Instituto de Empresa); RACHIDA JUSTO (Instituto de Empresa); CRISTINA CRUZ (Instituto de Empresa) |
| Abstract: | This paper uses family embeddedness (Cliff and Aldrich, 2003) and Work Family Interface (WFI) (Jennings and McDougald, 2007) to analyze the effect of gender and income on the relationship between family employment and firm performance in the context of micro and small family enterprises. Our results indicate that family employment contributed to increase sales but was negatively related to firm´s profitability. Moreover, the results indicate that when the business is the main source of household income the family employee´s positive impact on performance is reduced, and that the positive relationship between family employment and firm performance is stronger in woman run firms. |
| Keywords: | Family firms, Gender |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:emp:wpaper:wp08-09&r=lab |
| By: | Ibanez, Marcela (Department of Economics, School of Business, Economics and Law, Göteborg University); Czermak, Simon (University of Innsbruck); Sutter, Matthias (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | We study behavior in a search experiment where sellers receive randomized bids from a computer. At any time, sellers can accept the highest standing bid or ask for another bid at positive costs. We find that sellers stop searching earlier than theoretically optimal. Inducing a mild form of time pressure strengthens this finding in the early periods. There are marked gender differences. Men search significantly shorter than women. If subjects search in groups of two subjects, there is no difference to individual search, but teams of two women search much longer than men and recall more frequently.<P> |
| Keywords: | Search experiment; Time; Group decision; Gender differences |
| JEL: | C91 C92 D83 |
| Date: | 2008–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0296&r=lab |
| By: | Derek C. Jones; Panu Kalmi; Takao Kato; Mikko Mäkinen |
| Abstract: | ABSTRACT : In this paper, we present preliminary empirical findings on the incidence of employee involvement practices in the Finnish manufacturing sector. The novel survey on EI practices is based on a representative random sample from the population of the Finnish manufacturing firms who had 50 or more employees in 2005. Our main findings are that employee involvement practices are widespread in Finnish firms, although there is variation in the use of individual practices. Job rotation and satisfaction surveys are the most common practices and board representation the least common. Studying the determinants of these practices, we find evidence that they are more commonly used in larger firms and in firms that use heavily other advanced management practices. |
| Keywords: | new workplace practices, HRM, employee participation |
| JEL: | M54 J41 J53 C21 |
| Date: | 2008–04–07 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1131&r=lab |
| By: | Kam Ki Tang; Leopoldo Yanes (School of Economics, The University of Queensland) |
| Abstract: | This paper incorporates hierarchical structure into the neoclassical theory of the firm. Firms are hierarchical in two respects: the organization of workers in production and the wage structure. The firm’s hierarchy is represented as a sector of a circle, where the radius represents the hierarchy’s height, the width of the sector represents the breadth of the hierarchy at a given height, and the angle of the sector represents span of control. A perfectly competitive firm chooses height and width, as well as capital, in order to maximize profit. We analyze the short run and long run impact of changes in scale economies, input substitutability, and input and output prices on the firm’s hierarchical structure. We find that the firm grows as the specialization of its workers increases or as its output price increases relative to input prices. The effect of changes in scale economies is contingent on the price of output. The model also brings forth an analysis of wage inequality within the firm, which is found to be independent of the firm’s hierarchical organization of workers, and only depends on the firm’s wage schedule. |
| Keywords: | Theory of the firm; Hierarchical structure; Economies of scale; Input substitutability; Inequality |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uq2004:362&r=lab |
| By: | Martin S. Feldstein |
| Abstract: | The level of productivity doubled in the U.S. nonfarm business sector between 1970 and 2006. Wages, or more accurately total compensation per hour, increased at approximately the same annual rate during that period if nominal compensation is adjusted for inflation in the same way as the nominal output measure that is used to calculate productivity. Total employee compensation as a share of national income was 66 percent of national income in 1970 and 64 percent in 2006. This measure of the labor compensation share has been remarkably stable since the 1970s. It rose from an average of 62 percent in the decade of the 1960s to 66 percent in the decades of the 1970s and 1980s and then declined to 65 percent in the decade of the 1990s where it has again been from 2000 until the most recent quarter. |
| JEL: | E24 J3 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13953&r=lab |
| By: | Razzak, Weshah |
| Abstract: | As far as we know there has been no, or very little, empirical examination of search models and unemployment – vacancy relationship in New Zealand. We empirically examine dynamic matching functions in the New Zealand labor market over the period 1986-2006. Further, it is well documented that although New Zealand and Australia embarked on similar wide economic reforms almost 25 years ago, the level of New Zealand’s labor productivity is still lower than that of Australia (Razzak, 2007) and lower than the US productivity level (Prescott, 2002). It is has been argued that among the main explanatory variable is the low level of capital intensity – capital per hour worked - Razzak (2007) and Hall and Scobie (2005). However, there has been no formal explanation for the low level of capital intensity. This paper explains why capital investments are relatively lower in New Zealand. We do this by examining the dynamics of the labor markets in New Zealand and Australia. |
| Keywords: | Matching Function; Beveridge curve; Labor Productivity |
| JEL: | C13 J64 C22 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8262&r=lab |
| By: | Eriksson, Tor (Aarhus School of Business); Poulsen, Anders (University of East Anglia); Villeval, Marie-Claire (CNRS, GATE) |
| Abstract: | This paper experimentally investigates the impact of different pay and relative performance information policies on employee effort. We explore three information policies: No feedback about relative performance, feedback given halfway through the production period, and continuously updated feedback. The pay schemes are a piece rate payment scheme and a winner-takes-all tournament. We find that, regardless of the pay scheme used, feedback does not improve performance. There are no significant peer effects in the piece-rate pay scheme. In contrast, in the tournament scheme we find some evidence of positive peer effects since the underdogs almost never quit the competition even when lagging significantly behind, and frontrunners do not slack off. Moreover, in both pay schemes information feedback reduces the quality of the low performers’ work. |
| Keywords: | performance pay, tournament, piece rate, peer effects, information, feedback, evaluation, experiment |
| JEL: | C70 J16 J24 M52 J33 J31 C91 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3440&r=lab |
| By: | Seema Jayachandran; Adriana Lleras-Muney |
| Abstract: | Longer life expectancy should encourage human capital accumulation, since a longer time horizon increases the value of investments that pay out over time. Previous work has been unable to determine the empirical importance of this life-expectancy effect due to the difficulty of isolating it from other effects of health on education. We examine a sudden drop in maternal mortality risk in Sri Lanka between 1946 and 1953, which creates a sharp increase in life expectancy for school-age girls without contemporaneous effects on health, and which also allows for the use of boys as a control group. Using additional geographic variation, we find that the 70% reduction in maternal mortality risk over the sample period increased female life expectancy at age 15 by 4.1%, female literacy by 2.5%, and female years of education by 4.0%. |
| JEL: | I10 I20 O15 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13947&r=lab |
| By: | Jonathan Meer; Harvey S. Rosen |
| Abstract: | An ongoing controversy in the literature on the economics of higher education centers on whether the success of a school's athletic program affects alumni donations. This paper uses a unique data set to investigate this issue. The data contain detailed information about donations made by alumni of a selective research university as well as a variety of their economic and de-mographic characteristics. One important question is how to characterize the success of an athletic program. We focus not only on the performance of the most visible teams, football and basketball, but also on the success of the team on which he or she played as an undergraduate. One of our key findings is that the impact of athletic success on donations differs for men and women. When a male graduate's former team wins its conference championship, his donations for general purposes increase by about 7 percent and his donations to the athletic program increase by about the same percentage. Football and basketball records generally have small and statistically insignificant effects; in some specifications, a winning basketball season reduces donations. For women there is no statistically discernible effect of a former team's success on current giving; as is the case for men, the impacts of football and basketball, while statistically significant in some specifications, are not important in magnitude. Another novel result is that for males, varsity athletes whose teams were successful when they were undergraduates subsequently make larger donations to the athletic program. For example, if a male alumnus's team won its conference championship during his senior year, his subsequent giving to the athletic program is about 8 percent a year higher, ceteris paribus. |
| JEL: | D64 I22 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13937&r=lab |
| By: | Amegashie, J. Atsu |
| Abstract: | History is replete with overt discrimination on the basis of race, gender, age, citizenship, ethnicity, marital status, academic performance, health status, volume of market transactions, religion, sexual orientation, etc. However, these forms of discrimination are not equally tolerable. For example, discrimination based on immutable or prohibitively unalterable characteristics such as race, gender, or ethnicity is much less acceptable. Why? I develop a simple model of conflict which is driven by either racial (gender or ethnic) discrimination or generational discrimination (i.e., young versus old). When the conflicts are mutually exclusive, I find that racial discrimination is socially intolerable for a much wider range of parameter values relative to generational discrimination. When they are not mutually exclusive, I find that racial discrimination can be socially intolerable while generational discrimination is socially tolerable. The converse is not true. My results are not driven by a stronger intrinsic aversion to discrimination on the basis of immutable characteristics. I am able to explain why some forms of discrimination (e.g., racism) are much less tolerable than other forms of discrimination (e.g., age discrimination) without making any value judgements about either form of discrimination. |
| Keywords: | conflict, contest, discrimination, gender, race, generation |
| JEL: | D74 D72 K41 |
| Date: | 2008–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8238&r=lab |
| By: | Paul De Grauwe |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces9804&r=lab |