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on Labour Economics |
| By: | Hallberg, Daniel (Uppsala Center for Labor Studies) |
| Abstract: | In Sweden, employers pay non-wage costs for their workforce in the form of legislated employment tax and collective fees. For parts of the workforce, the collective fees are progressive with respect to the employee’s age and wage. The objective of this paper is to examine how non-wage costs affect voluntary early retirement. To this end we use a large longitudinal employer–employee matched data set with administrative records of the private sector in Sweden. We exploit the variation in collective fee costs across companies to identify employer incentives to encourage early retirement. The results from the instrumental variable estimator suggest that a 1 percentage point increase in non-wage costs in relation to wage costs increases retirement by 6 percent. Further, given the wage sum and workforce structure, large firms spend more on non-wage compensation than small firms. The share of non-wage costs in relation to the wage sum is also positively linked to net employment growth. |
| Keywords: | Early retirement; non-wage labor costs; pensions; labor demand; collective fees |
| JEL: | J21 J23 J26 J32 |
| Date: | 2011–03–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uulswp:2011_005&r=lab |
| By: | Pavel Gertler (National Bank of Slovakia, Research Departmen) |
| Abstract: | The paper studies the relationship between the local unemployment rate and wage level – commonly referred to as the wage curve. Using a panel data setup for annual enterprise-level microdata, we confirm previous findings that wages in Slovakia are, on the whole, relatively flexible – with a rise in the local unemployment rate of 1 percentage point being associated with a drop in wages of 0.85%. We find, however, that these elasticities differ considerably across sectors, regions and, in particular, skills. Our results indicate that overall wage flexibility in the Slovak labour market is driven more by the wage flexibility of higher-skilled employees, and their broader opportunities for employment, than by the institutional arrangements of the labour market. |
| Keywords: | wage curve, panel data, unemployment elasticity of wages, wage flexibility, Slovakia, Phillips curve, microdata |
| JEL: | E E C |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:svk:wpaper:1012&r=lab |
| By: | Binzel, Christine (Dartmouth College); Assaad, Ragui (University of Minnesota) |
| Abstract: | Female labor force participation has remained low in Egypt. This paper examines whether male international migration provides a leeway for women to enter the labor market and/or to increase their labor supply. In line with previous studies, we find a decrease in wage work in both rural and urban areas. However, women living in rural areas and affected by migration are much more likely to be employed in non-wage activities (i.e. unpaid family work) and subsistence work compared to women in non-migrant households. Furthermore, we find evidence that this labor supply response is driven by the household’s need to replace the migrant's labor rather than by a loosening of a financing constraint on family enterprises made possible by the flow of remittances. |
| Keywords: | migration, remittances, labor supply, gender |
| JEL: | O15 J22 F22 R23 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5589&r=lab |
| By: | Rita Asplund; Sami Napari |
| Abstract: | The paper compares the gender wage differentials of two occupation groups – innovation and non-innovation workers – separately for manufacturing and services using Finnish private-sector data. We apply a decomposition method based on unconditional quantile regression techniques to identify key factors underlying the gender wage gaps observed along the whole wage distribution, as well as changes in these wage gaps between 2002 and 2009. This more nuanced approach provides important new insights. We find conspicuous differences in average gender wage gaps, in gender wage-gap profiles across the wage distribution and also in the evolution of gender wage differentials over time between sectors and occupation groups. Our results imply that sector-specific factors are a more important driving force behind these differences in patterns and trends of gender wage gaps, although occupation-specific factors cannot be totally dismissed. Hence, comparisons of gender wage gaps, including their underlying sources, of innovation and non-innovation workers for too broadly defined segments of the labour market may result in misleading conclusions concerning the factual role of intangible capital. |
| Keywords: | gender wage gap, decomposition, human capital, intangible capital, quantile regression, wage formation, services, manufacturing |
| Date: | 2011–03–23 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1243&r=lab |
| By: | Picchio, Matteo (Tilburg University); van Ours, Jan C. (Tilburg University) |
| Abstract: | This paper investigates whether on-the-job training has an effect on the employability of workers. Using data from the Netherlands we disentangle the true effect of training incidence from the spurious one determined by unobserved individual heterogeneity. We also take into account that there might be feedback from shocks in the employment status to future propensity of receiving firm-provided training. We find that firm-provided training significantly increases future employment prospects. This finding is robust to a number of robustness checks. It also holds for older workers, suggesting that firm-provided training may be an important instrument to retain older workers at work. |
| Keywords: | training, employment, human capital, older workers |
| JEL: | C33 C35 J21 J24 M53 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5591&r=lab |
| By: | Lefter, Alexandru; Sand, Benjamin M. |
| Abstract: | In this paper, we review the evidence for job polarization in the U.S. and provide a description of the occupational employment changes that characterized the U.S. labor market during the 1970s, 1980s, and 1990s. We begin by replicating the existing job polarization trends, which are produced using a modified occupational coding scheme intended to make occupational categories comparable over time. Using two alternative procedures to obtain consistent occupational codes across decades, we show that the finding that jobs polarized in the 1990s relative to the 1980s no longer holds. Instead, we find that occupational employment shifts were very similar during the two decades. In addition, we demonstrate that the method used to rank occupations according to their skill content has a substantial impact on the employment growth in low-skill job categories. Finally, using an additional occupational crosswalk that allows us to obtain consistent occupational categories from 1970 to 2002, we provide evidence in favor of a long-term trend towards employment growth in high-skill jobs and employment decline in some middle-skill jobs, but no sharp contrast between the 1980s and the 1990s. Our findings suggest that the evolution of the occupational employment structure and the divergent wage growth patterns observed during the 1980s and 1990s do not easily fit within the routinization story as usually told. |
| Keywords: | Job Polarization, Occupational Employment, Employment Growth, Wage Inequality |
| JEL: | J21 J31 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2011:03&r=lab |
| By: | Pedro Gomes |
| Abstract: | I build a dynamic stochastic general equilibrium model with search and matching frictions in order to study the labour market effects of public sector employment and wages. Public sector wages are important to achieve the effcient allocation. High wages induce too many unemployed to queue for public sector jobs, raising unemployment. Following technology shocks, public sector wages should be procyclical and deviations from the optimal policy increase the volatility of unemployment significantly. Another conclusion is that different types of fiscal shocks have opposite effects on labour market variables. I then estimate the parameters of the model for the United States |
| JEL: | E24 E62 J45 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:euf:ecopap:0439&r=lab |
| By: | Gimpelson, Vladimir (CLMS, Moscow Higher School of Economics); Kapeliushnikov, Rostislav (CLMS, Moscow Higher School of Economics) |
| Abstract: | The paper discusses how the Russian labor market has been evolving over two decades of the transition. It starts with tracing key labor market indicators such as employment, unemployment, labor force participation, working hours, and real wages. Their dynamics indicate that the labor market tends to operate in a non-conventional fashion and far from the patterns expected initially. The authors argue that the current Russian labor market represents a peculiar model that is different from what is observed in the rest of Europe outside of the CIS. Having established this, they look at the institutional foundations that make this unconventional performance possible and proceed with discussing political economy and welfare implications. The findings are compared with the experience of other post-socialist countries. |
| Keywords: | employment, unemployment, wages, labor market institutions, Russia |
| JEL: | J8 J21 J31 J62 P20 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5588&r=lab |
| By: | Tessa Bold; Mwangi Kimenyi; Germano Mwabu; Justin Sandefur |
| Abstract: | In 2003 Kenya abolished user fees in all government primary schools. We find that this Free Primary Education (FPE) policy resulted in a decline in public school quality and increased demand for private schooling. However, the former did not reflect a decline in value added by public schools - as anticipated if fees contribute to local accountability - but rather the selection of weaker pupils into free education. In contrast, affluent children who exited to the private sector in response to FPE benefited from a strong, causal effect on their exam performance which is robust to selection on unobserved ability. |
| Keywords: | user fees; school quality; private schools |
| JEL: | H52 I22 O15 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2011-04&r=lab |
| By: | Nic Spaull (Department of Economics, University of Stellenbosch) |
| Abstract: | The many and varied links between student socio-economic status and educational outcomes have been well documented in the South African economics of education literature. The strong legacy of apartheid and the consequent correlation between education and wealth have meant that, generally speaking, poorer students perform worse academically. The present study uses the recent Southern and East African Consortium for Monitoring Educational Quality (SACMEQ III) dataset for South Africa to identify those factors that have a significant effect on student maths and reading performance in Grade 6. The research confirms previous findings that socio-economic status, and particularly school socioeconomic status, is important when understanding student success or failure. Other factors which contribute significantly to student performance are homework frequency, preschool education, and the availability of reading textbooks. In contrast, teacher-subject knowledge was found to have only a modest impact on Grade 6 student performance. Policy interventions are also highlighted. The study concludes that South Africa is still a tale of two schools: one which is wealthy, functional and able to educate students, while the other is poor, dysfunctional, and unable to equip students with the necessary numeracy and literacy skills they should be acquiring in primary school. Nevertheless, it suggests that there are some options available to policy-makers which are expected to have a positive effect on student performance. |
| Keywords: | SACMEQ, South Africa, primary education, education, education production function, education policy, economics of education |
| JEL: | I20 I21 I28 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers139&r=lab |
| By: | Mühlemann, Samuel (University of Bern); Ryan, Paul (King's College, Cambridge); Wolter, Stefan (University of Bern) |
| Abstract: | Although interest in monopsonistic influences on labour market outcomes has revived in recent years, only a few empirical studies provide direct evidence on it. This paper analyses empirically the effect of monopsony power on pay structure, using a direct measure of labour market 'thinness'. We find that having fewer competitors for skilled labour is associated at the level of the establishment with lower pay for both skilled labour and trainees, but not for unskilled labour. These findings have potentially important implications for the economic theory of training, as most recent models assume that skilled pay is set monopsonistically but both unskilled and trainee pay are determined competitively. Our results support those assumptions for skilled pay and unskilled pay, but not for trainee pay. |
| Keywords: | monopsony, wage differentials, firm-sponsored training |
| JEL: | J24 J31 J42 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5587&r=lab |
| By: | Anna Makles (Department of Economics University of Wuppertal); Kerstin Schneider (Department of Economics University of Wuppertal) |
| Abstract: | This paper analyzes the effect of the abolition of school districts in North-Rhine Westphalia on ethnic segregation in primary schools, using data from the school statistics from 2006/07 to 2008/09. The effect of the new policy is not easily identified, because several additional changes to the school law and nationality law have also affected segregation. We propose using a measure of systematic segregation and a Wald test in order to test for differences in systematic segregation and to estimate a random effects model to explain differences in systematic segregation across municipalities. The ethnic groups analyzed are Turkish and non-Turkish students, non-German and German students, and Muslim and non-Muslim students. It is shown that abolishing school districts has not increased systematic segregation in primary schools. However, segregation has been affected by policy changes other than the abolition of school districts. |
| Keywords: | School choice, policy reform, systematic segregation, dissimilarity index, school districts |
| JEL: | H75 I21 I28 J15 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:bwu:schdps:sdp11003&r=lab |
| By: | Mia de Vos (Department of Economics, University of Stellenbosch) |
| Abstract: | Based on a graphical and statistical analysis of the National Income Dynamic Study (NIDS), this paper provides a comprehensive picture of the educational context in South Africa. The main question under consideration is whether quantitative and qualitative educational attainment differs significantly along racial lines. The data shows that the government has been largely successful in reducing the race-based educational gap in terms of school enrolment and years of education successfully completed. Matriculation results and numeracy test scores unfortunately suggest that higher levels of educational attainment do not necessarily reflect positively on educational outcomes. This implies that the South African educational system is still characterized by large differentials in the quality of education. |
| Keywords: | Education quality, Cognitive skills, South Africa, Racial differential |
| JEL: | I21 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers134&r=lab |
| By: | Stefan Krabel (Internationales Zentrum für Hochschulforschung (INCHER)); Choni Flöther (Institut für Volkswirtschaftslehre: Fachgebiet Allg. Wirtschaftspolitik) |
| Abstract: | In this study we trace university graduates’ labor mobility when entering the labor market after graduation. We examine to what extent such mobility is determined by regional factors of the university region, personal characteristics of graduates as well as their field of study. Our analysis is based on a large-scale dataset of labor market mobility of individuals who graduated from 36 German universities in 2007. Our results suggest that graduates are less likely to leave metropolises and that regional labor markets influence mobility. Further, field of study and individual willingness to be mobile, as indicated by prior mobility from school to university and mobility during the studies, impact mobility when entering the labor market. These results indicate that both regional and individual factors influence graduate mobility. Moreover, by applying a two-stage model approach we find that mobility is mediated by the probability to find regular employment. |
| Keywords: | Regional Mobility, Regional Characteristics, University, Graduates, Employment, Labor Markets |
| JEL: | J62 J64 R11 I21 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201110&r=lab |
| By: | Julie L. Hotchkiss; M. Melinda Pitts; Mary Beth Walker |
| Abstract: | Utilizing linked vital statistics, administrative employer, and state welfare records, the analysis in this paper investigates the determinants of a woman's intermittent labor force decision at the time of a major life event: the birth of a child. The results indicate that both direct and opportunity labor market costs of exiting the workforce figure significantly into that decision. Further, the analysis reveals the importance of including information about the mother's prebirth job when making inferences about the role various demographics play in the intermittent labor force decision. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2011-02&r=lab |
| By: | Ulrich Zierahn (University of Kassel); |
| Abstract: | Regional labor markets are characterized by huge disparities of unemployment rates. Models of the New Economic Geography explain how disparities of regional goods markets endogenously arise but usually assume full employment. This paper discusses regional unemployment disparities by introducing a wage curve based on efficiency wages into the New Economic Geography. The model shows how disparities of regional goods and labor markets endogenously arise through the interplay of increasing returns to scale, transport costs, congestion costs, and migration. In result, the agglomeration pattern might be catastrophic or smooth depending on congestion costs. The transition between both patterns is smooth. |
| Keywords: | regional unemployment, New Economic Geography, core-periphery, wage curve, labor migration |
| JEL: | J64 R12 R23 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201106&r=lab |
| By: | Picot, Garnett (Queen's University); Sweetman, Arthur (McMaster University) |
| Abstract: | Immigrants to Canada enjoy labour market outcomes that are more favourable than those for their counterparts in Sweden. In an effort to understand these gaps, Canada’s immigration policy and outcomes are contrasted to the Swedish immigration experience. The nature of immigration and structural differences involving the domestic labour markets are hypothesized to provide plausible explanations for at least some of the gap. Additionally, there are dynamic issues related to, for instance, the timing of immigrant entry with respect to the business cycle, and changes in the rates of immigration flows, that may have some impact on labour market outcomes and explain some short- to medium-term aspects of the gap in outcomes. On the other hand, common trends are also observed; both unemployment and earnings outcomes among entering immigrants have deteriorated significantly in Canada since the 1980s, as they have in many western countries including Sweden. |
| Keywords: | immigration, cross-country differences, Canada, Sweden |
| JEL: | J61 J68 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp25&r=lab |
| By: | Philip Du Caju; François Rycx; Ilan Tojerow |
| Abstract: | In the last decades, international trade has increased between industrialised countries and between high- and low-wage countries. This important change has raised questions on how international trade affects the labour market. In this spirit, this paper aims to investigate the impact of international trade on wage dispersion in a small open economy. It is one of the few to: i) use detailed matched employer-employee data to compute industry wage premia and disaggregated industry level panel data to examine the impact of changes in international trade on changes in wage differentials, ii) simultaneously analyse both imports and exports, and iii) examine the impact of imports according to the country of origin. Looking at the export side, we find (on the basis of the system GMM estimator) a positive effect of exports on industry wage premia. The results also show that import penetration has a significant and negative impact on industry wage differentials whatever the country of origin. However, the country of origin appears to matter quite a lot. Indeed, the detrimental effect of imports on wages is found to be significantly bigger when the latter come from low-income countries than from high-income countries. |
| Keywords: | Wage Structure; Inter-industry Wage Differentials; International Trade; Matched Employer-employee Data |
| JEL: | F16 J31 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/81356&r=lab |
| By: | Bilal Barakat |
| Abstract: | Higher education is never free — the question is: who should pay for it? Current policy debates in Europe are increasingly focusing on raising the share of private funding. To date, policy discussions have centred on a relatively small number of alternatives, namely full public funding, tuition fees, either up-front or delayed and income-contingent, or a surtax on graduate incomes. Here, I present an alternative that, to my knowledge, has not been suggested previously, but sidesteps some important objections against other forms of private contributions. The basic idea explored here is to increase the statutory retirement age for higher education graduates relative to non-graduates. In principle, the resulting decrease in future public pension liabilities can be converted into increased funds for present spending on higher education. In this first discussion of the above proposal I consider important caveats, perform an order-of-magnitude estimate of financial feasibility, i.e. whether deferred graduate retirement (DGR) could potentially raise sufficient funds to replace tuition fees, and discuss advantages and disadvantages compared to more established policy options. I conclude that, at least in the European context, DGR is potentially feasible both financially and politically, has a number of desirable properties compared to the alternatives, and deserves more serious investigation. |
| Keywords: | Higher education, cost-sharing, retirement age. |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:vid:wpaper:1105&r=lab |
| By: | Prema-chandra Athukorala; Evelyn S Devadason |
| Abstract: | This paper investigates the impact of foreign labour on domestic manufacturing wages through a case study of Malaysia, a country where foreign labour immigration has played a key role in manufacturing growth over the past two decades. The main focus of the paper is on an econometric analysis of the determinants of inter-industry variation in wage growth using a new panel dataset. The results suggest that wage growth is fundamentally embedded in the structure and performance of domestic manufacturing. There is evidence of a statistically significant negative impact of foreign labour on the growth of unskilled-worker wages, but the magnitude of the impact is rather small. |
| Keywords: | International labour migration, foreign workers, wages, Asia, Malaysia |
| JEL: | F22 J31 J61 O53 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2011-03&r=lab |
| By: | Thomas Bassetti (Università di Padova); Luca Corazzini (Università di Padova); Darwin Cortes (Universidad del Rosario) |
| Abstract: | Does immigration cause crime? To answer this question, we build a two-country general equilibrium model with search costs in which the migration (in/out-)flows, the crime rates and the equilibrium wages in the two countries are determined by the interaction between the labor market, the crime market and the decision to migrate. The main result of our model is that, in equilibrium, the relationship between immigration and crime depends on the conditions of both the labor and crime markets of the two countries. In particular, when the tightness of the labor market is sufficiently elastic relative to that of the crime market, immigration causes a reduction in the domestic crime rate of the host country. An implication of this result is that migration flows from countries with strong work rigidities to societies characterized by more elastic labor markets are mutually benefic in terms of reducing the corresponding crime rates. |
| Keywords: | Crime Rate, Labor Market, Immigration. |
| JEL: | J61 J64 K42 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0121&r=lab |
| By: | Oshio, Takashi; Nozaki, Kayo; Kobayashi, Miki |
| Abstract: | In this study, we compare the association of marital satisfaction with the division of labor between husband and wife in Asia, based on Chinese, Japanese, and Korean General Social Surveys in 2006 (N = 2,346, 997, and 990, respectively). Results show that in all three countries, wives are less satisfied than husbands with marriage, mainly because wives do disproportionately more housework than husbands. Aside from this common gender difference, there are noticeable differences among the three countries. Chinese couples are relatively in favor of an egalitarian division of labor in terms of both market work and housework. Japanese couples are supportive of traditional specialization, with the wives flexibly shifting their efforts between market work and housework. Korean couples are under pressure from conflicts between the wife‘s labor force participation and the traditional division of labor in the household. |
| Keywords: | Division of household labor, gender difference, marital satisfaction |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:hit:piecis:502&r=lab |
| By: | Robert Wagner (Ludwig-Maximilians-University Munich); Maximilian Wolf (Ludwig-Maximilians-University Munich and Ludwig-Froehler-Institut Munich) |
| Abstract: | This paper estimates the impact of job satisfaction dimensions such as joy on occupation, job security, financial attractiveness, working conditions, and social relations on the intention of Bavarian crafts apprentices to leave their training firm or occupation. We find that joy on occupation and job security are the most important drivers for the intention to stay with the training firm and that the intention to leave the training firm or occupation is not financially driven. We also discuss the far reaching implications for training firms´ recruiting strategies and institutions in the crafts sector. |
| Keywords: | Job change, job satisfaction, crafts apprentices |
| JEL: | J24 J28 J62 J63 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:iso:educat:0060&r=lab |
| By: | Kenneth Aarskaug Wiik and Lars Dommermuth (Statistics Norway) |
| Abstract: | Using data on individuals born 1946 to 1972 from the Norwegian Generations and Gender Survey (N = 7,587) we examine differentials in the number and incidence of co-residential relationships by gender and socioeconomic status. Regarding number of relationships, we found that women and younger respondents more often than men and older respondents reported having had two or more unions. 10% of the men and 5% of the women had no union experience by age 35. Controlling for relevant characteristics, our multivariate results showed that high income men experienced fewer unions than lower income men. Having a low income increased the odds of remaining single among men, whereas there was a positive association between tertiary education and remaining unpartnered among women. |
| Keywords: | Cohabitation; gender; GGS; marriage; Norway; relationship career; socioeconomic resources |
| JEL: | Z10 Z13 Z19 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:650&r=lab |
| By: | Vikström, Johan (Uppsala Center for Labor Studies); Rosholm, Michael (Department of Economics and Business, Aarhus University); Svarer, Michael (Department of Economics and Business, Aarhus University) |
| Abstract: | We re-analyze the effects of a Danish active labour market program social experiment, that included a range of sub-treatments, including monitoring, job search assistance and training. Previous studies have shown that the overall effect of the experiment is positive. We apply newly developed non-parametric methods to determine which of the individual policies that explains the positive effect. The use of non-parametric methods to separate sub-treatment effects is important from a methodological point of view, since the alternative, namely parametric/distributional assumptions, is in conflict with the concept of experimental evidence. Our results are highly relevant in a policy perspective, as optimal labour market policy design requires knowledge on the effectiveness of specific policy measures. |
| Keywords: | Active labour market policy; treatment effect; non-parametric bounds |
| JEL: | C14 C41 C93 |
| Date: | 2011–03–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uulswp:2011_004&r=lab |
| By: | Dimitrios Christelis (University of Salerno and CSEF); Dimitris Georgarakos (Goethe University Frankfurt and CFS); Tullio Jappelli (University of Naples Federico II, CSEF and CEPR) |
| Abstract: | We use data from the 2009 Internet Survey of the Health and Retirement Study to examine the consumption impact of wealth shocks and unemployment during the Great Recession in the US. We find that many households experienced large capital losses in housing and in their financial portfolios, and that a non-trivial fraction of respondents have lost their job. As a consequence of these shocks, many households reduced substantially their expenditures. We estimate that the marginal propensities to consume with respect to housing and financial wealth are 1 and 3.3 percentage points, respectively. In addition, those who became unemployed reduced spending by 10 percent. We also distinguish the effect of perceived transitory and permanent wealth shocks, splitting the sample between households who think that the stock market is likely to recover in a year’s time, and those who don’t. In line with the predictions of standard models of intertemporal choice, we find that the latter group adjusted much more than the former its spending in response to financial wealth shocks. |
| Keywords: | Marginal Propensity to Consume; Wealth Shocks; Unemployment |
| JEL: | E21 D91 |
| Date: | 2011–03–24 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:279&r=lab |
| By: | Ouazad, Amine; Rancière, Romain |
| Abstract: | This paper shows that the mortgage credit boom has significantly affected urban and school racial segregation from 1995 to 2007. We develop a model of urban segregation with credit constraints that shows that easier credit can either increase or decrease segregation, depending on the race of the marginal consumer who benefits from the expansion of credit. We then use the annual racial demographics of each of the approximately 90,000 public schools in the United States from 1995 to 2007, matched to a national comprehensive dataset of mortgage originations, linked to the neighborhood of the house, to show that higher leverage increases the segregation of African American and Hispanic students. Both segregation across schools and across school districts are higher when the leverage is higher. Higher leverage allows households to avoid interracial contact. |
| Keywords: | lending standards; mortgage; segregation |
| JEL: | H0 J15 R2 R3 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8300&r=lab |
| By: | Chiappori, Pierre-André (Columbia University); Iyigun, Murat (University of Colorado, Boulder); Lafortune, Jeanne (University of Maryland); Weiss, Yoram (Tel Aviv University) |
| Abstract: | We develop a collective household model with spousal matching in which there exists marital gains to assortative matching and marriage quality for each couple is revealed ex post. Changes in alimony laws are shown to affect existing couples and couples-to-be differently. For existing couples, legislative changes that favor (wo)men benefit them especially if the marriage match quality is low, while, for couples not yet formed, they generate offsetting intra-household transfers and lower intra-marital allocations for the spouses who are the intended beneficiary. We then estimate the effect of granting alimony rights to cohabiting couples in Canada using a triple-difference framework since each province extended these rights in different years and requiring different cohabitation length. We find that obtaining the right to petition for alimony led women to lower their labor force participation. These results, however, do not hold – and, in some cases, are reversed – for newly formed cohabiting couples. |
| Keywords: | intra-household allocations, matching, cohabitation, alimony laws |
| JEL: | J12 J16 J24 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5594&r=lab |
| By: | Marco Malgarini (Italian National Institute of Statistics); Massimo Mancini (Italian National Institute of Statistics); Lia Pacelli (Department of Economics and Public Finance "G. Prato", University of Torino) |
| Abstract: | The flexicurity approach claims a positive effect of flexible labour on firm performance, also through an increased ability to innovate. Critics consider it a deregulation of the labour market, decreasing investment in human capital and innovation. We contribute to this broad debate providing an estimate of the relationships linking innovative investment, substitution investment, permanent hires and temporary hires. In particular, we aim at affirming or denying that innovative investments are accompanied by a specific kind of workforce, being it stable or flexible. In doing so, we contribute to bridge the gap among two quite separate strands of literature, as existing literature usually analyses capital and labour separately. Estimating a non linear recursive equation system we highlight a significant increase in the likelihood of hiring on a permanent base when the firm innovates; this holds till 2008. Afterward, during the crisis, innovating firms are more likely to hire using temporary contracts instead, a possible signal of a cost saving strategy adopted in a loose labour market. Furthermore, both permanent and temporary hires never depend on increases in labour costs; however, substitution investment increases when labour cost increases, maybe in an attempt to increase labour productivity through a more efficient capital equipment. |
| Keywords: | EPL, investment, innovation, flexicurity, survey data |
| JEL: | J41 J6 D24 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:tur:wpaper:19&r=lab |
| By: | R. Patuelli; N. Schanne; D. A. Griffith; P. Nijkamp |
| Abstract: | The geographical distribution and persistence of regional/local unemployment rates in heterogeneous economies (such as Germany) have been, in recent years, the subject of various theoretical and empirical studies. Several researchers have shown an interest in analysing the dynamic adjustment processes of unemployment and the average degree of dependence of the current unemployment rates or gross domestic product from the ones observed in the past. In this paper, we present a new econometric approach to the study of regional unemployment persistence, in order to account for spatial heterogeneity and/or spatial autocorrelation in both the levels and the dynamics of unemployment. First, we propose an econometric procedure suggesting the use of spatial filtering techniques as a substitute for fixed effects in a panel estimation framework. The spatial filter computed here is a proxy for spatially distributed region-specific information (e.g., the endowment of natural resources, or the size of the ‘home market’) that is usually incorporated in the fixed effects parameters. The advantages of our proposed procedure are that the spatial filter, by incorporating region-specific information that generates spatial autocorrelation, frees up degrees of freedom, simultaneously corrects for time-stable spatial autocorrelation in the residuals, and provides insights about the spatial patterns in regional adjustment processes. We present several experiments in order to investigate the spatial pattern of the heterogeneous autoregressive parameters estimated for unemployment data for German NUTS-3 regions. We find widely heterogeneous but generally high persistence in regional unemployment rates. |
| JEL: | C21 C23 R12 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp743&r=lab |
| By: | Genda, Yuji |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:hit:piecis:507&r=lab |
| By: | Richard Alan Seals Jr. |
| Abstract: | I examine the link between IQ and an individual¡¯s decision to join a gang. Data from the NLSY97 and Project on Human Development in Chicago Neighborhoods (PHDCN) are used to estimate time-to-first gang participation. Results from a variety of models which account for sibling effects, neighborhood effects, and non-cognitive traits indicate low IQ is a robust predictor of gang participation. However, the PHDCN results reveal gang participation is affected by a person¡¯s relative IQ, with respect to one¡¯s neighborhood peers. Because the majority of trade and industry is underground, official statistics overlook that neighborhoods where gang activity is prevalent are often at full employment. If gangs provide security and enforce contracts where civil government does not, then low-IQ individuals may have comparative advantage in gang activities. Because gangs are often well-defined social groups within neighborhoods, cognitive traits could be expressed at the neighborhood level through this same economic channel. |
| JEL: | J24 Z13 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:abn:wpaper:auwp2011-03&r=lab |
| By: | Vincenzo Atella (University of Rome "Tor Vergata"); Joanna Kopinska (University of Rome "Tor Vergata") |
| Abstract: | In this paper we empirically study the relationship between education attainment and Body Mass Index (BMI), using as theoretical reference an energy balance model. Our data consist of individual level data from eight waves of the Italian survey on life-styles. We use Quantile Regression (QR) technique to study the impact of education along the whole distribution of the BMI and provide evidence that the effect of education on BMI is greater in magnitude for the overweight and the obese. This effect is reinforced (three times greater) once we account for the endogeneity of some of the determinants of BMI (IVQTE). Finally, we adopt a model specification that allows us to test if education is likely to affect BMI indirectly, through channels such as the adoption of better life styles (healthier diet and more sport activities). Results seem to confirm this hypothesis, and this may reveal an important information for policymakers. |
| Keywords: | BMI, Instrumental variables, Quantile regression, IVQTE |
| JEL: | C23 I11 L23 I12 I21 |
| Date: | 2011–03–23 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:189&r=lab |
| By: | Mirella Damiani; Fabrizio Pompei; Andrea Ricci |
| Abstract: | The present study examines cross-national and sectoral differences in Total Factor Productivity (TFP) in fourteen European countries and ten sectors from 1995 to 2007. The main aim is to ascertain the role of employment protection of temporary contracts on TFP by estimating their effects with a “difference-in-difference” approach. Results show that deregulation of temporary contracts negatively influences the growth rates of TFP in European economies and that, within sectoral analysis, the role of this liberalisation is greater in industries where firms are more used to opening short-term positions. By contrast, in our observation period, restrictions on regular jobs do not cause significant effects on TFP, whereas limited regulation of product markets and higher R&D expenses positively affect efficiency growth. |
| Keywords: | productivity, labour regulation. |
| JEL: | O40 O43 O47 J58 |
| Date: | 2011–03–23 |
| URL: | http://d.repec.org/n?u=RePEc:pia:wpaper:87/2011&r=lab |
| By: | Dominik Becker (CGS, University of Cologne); Klaus Birkelbach (University of Duisburg-Essen) |
| Abstract: | The theoretical contribution of this paper is to regard teachers' evaluations with a prognostic claim about students' future academic ability as a result of a special social situation in the classroom. We assume that after teachers have framed the social situation, particular scripts of action will determine the criteria on which teachers ground their evaluations. In concrete terms, we propose a theoretical approach that integrates existing meritocratic and 'habitus' explanations in the comprehensive framework of frame selection theory with its important distinction between a more automatic and a more rational type of information processing. Our empirical contribution is to test the hypotheses that we deduced from our theoretical assumptions in a set of structural equation models. Using data from the Cologne High School Panel (CHiSP), we find that even when controlling for the path structure of the model, indicators for both kinds of concepts are statistically significant. However, regardless of the underlying type of information processing, the predictive power of indicators operationalizing the meritocratic explanation is comparatively higher. |
| Keywords: | teachers' evaluations, inequality in educational opportunities, frame selection theory, structural equation modeling |
| Date: | 2011–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:cgr:cgsser:02-04&r=lab |
| By: | Campante, Filipe R. (Harvard University); Chor, Davin (Singapore Management University) |
| Abstract: | We examine several hypotheses regarding the determinants and implications of political protest, motivated by the wave of popular uprisings in Arab countries starting in late 2010. While the popular narrative has emphasized the role of a youthful demography and political repression, we draw attention back to one of the most fundamental correlates of political activity identified in the literature, namely education. Using a combination of individual-level micro data and cross-country macro data, we highlight how rising levels of education coupled with economic under-performance jointly provide a strong explanation for participation in protest modes of political activity as well as incumbent turnover. Political protests are thus more likely when an increasingly educated populace does not have commensurate economic gains. We also find that the implied political instability is associated with heightened pressures towards democratization. |
| JEL: | D72 D78 I20 I21 O15 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp11-018&r=lab |
| By: | Antonella Mennella |
| Abstract: | This paper’s purpose is to show a new informal social networks interpretation, according to which social networks change their nature if they are located in social contexts where organised crime is relevant. Here the perusal of a social network is just a necessary condition to enter the labour market rather than a deliberate choice. Moreover this labour market is the ground where favouritisms and social and electoral consensus policies take place. |
| Keywords: | social networks, organised crime, labour market |
| JEL: | D85 J64 K00 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:rtr:wpaper:126&r=lab |
| By: | Masako Kimura (Nagoya City University) |
| Abstract: | This paper explores what factor is important to replicate U.S. fertility transition in the last two centuries. We solve a multiperiod version of the model of Kimura and Yasui (J Econ Growth 15(4):323-351, 2010) numerically, conducting several experiments based on it. We find that the main trend of fertility transition in the last two centuries is attributed to changes in gender division of labor associated with capital accumulation and technological progress, the plunge during 1920-1940 to negative shocks on male labor supply by the World War II, and the upswing during 1940-1965 to an atypical burst of technological progress in household sector. |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:764&r=lab |
| By: | Grace Lordan (School of Economics, The University of Queensland); David Johnston (Centre for Health Economics, Monash University, Australia) |
| Abstract: | The attitudes of the general British population towards Muslims changed post 2001, and this change led to a significant increase in Anti-Muslim discrimination. We use this exogenous attitude change to estimate the causal impact of increased discrimination on a range of objective and subjective health outcomes. The difference-in-differences estimates indicate that discrimination worsens blood pressure, cholesterol, BMI, self-assessed general health, and some dimensions of mental health. Thus, discrimination is a potentially important determinant of the large racial and ethnic health gaps observed in many countries. We also investigate the pathways through which discrimination impacts upon health, and find that discrimination has a negative effect on employment, perceived social support, and health-producing behaviours. Crucially, our results hold for different control groups and model specifications. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uq2004:421&r=lab |
| By: | M. Melinda Pitts; Mary Beth Walker; Brian S. Armour |
| Abstract: | Substantial racial disparities continue to persist in the prevalence of preterm births and low-birth-weight births. Health policy aimed at reducing these disparities could be better targeted if the differences in birth outcomes are better understood. This study decomposes these racial disparities in birth outcomes to determine the extent to which the disparities are driven by differences in measurable characteristics of black mothers and white mothers as well as the extent to which the gap results from differences in the impact of these characteristics. The analysis is focused on three adverse birth outcomes: preterm, early preterm birth (less than 32 weeks gestation), and low birth weight. The results suggest that differences in covariates accounted for approximately 25 percent of the gap in the incidence of preterm births. The specific characteristics that matter the most are marriage rates, father's characteristics, and prenatal care. For gestation-adjusted birth weight, approximately 16 percent of the racial gap for first births is explained by covariates; for subsequent births this covariate explanation rises to 22 percent of the gap. Furthermore, differences in coefficients explain about another quarter of the gap in preterm birth outcomes but very little of the gap in birth weight. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2011-01&r=lab |
| By: | Stark, Oded; Fan, C. Simon |
| Abstract: | This paper develops a model of voluntary migration into degrading work. The essence of the model is a tension between two âbads:â that which arises from being relatively deprived at home, and that which arises from engaging in humiliating work away from home. Balancing between these two âbadsâ can give rise to an explicit, voluntary choice to engage in humiliating work. The paper identifies conditions under which a migrant will choose to engage in degrading work rather than being forced into it, to work abroad as a prostitute, say, rather than on a farm. The paper delineates the possible equilibria and finds that greater relative deprivation will make it more likely that the equilibrium outcome will be âengagement in prostitution.â It is shown that under well specified conditions, every individual will work as a prostitute, yet every individual would be better off working on a farm. Put differently, when specific conditions are satisfied, there is a possibility of a âcoordination failure:â if individuals believe that everyone else will choose to be a prostitute, this belief will be self-fulfilling. In this case, all the individuals choose to engage in prostitution, which renders each of them worse off. The paper discusses various policy implications. It is shown that a policy intervention (a crackdown on migrantsâ engagement in prostitution), if implemented strictly, can increase everyoneâs welfare, but when the policy is implemented loosely, cracking down on prostitution will only reduce individualsâ welfare without reducing their engagement in prostitution. |
| Keywords: | Migrants, Relative deprivation, Degrading work, Humiliation, Multiple equilibria, Welfare assessment, Policy implications, Labor and Human Capital, Political Economy, F22, J24, J81, |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ubzefd:101648&r=lab |
| By: | Ono, Arito; Sakai, Koji; Uesugi、Iichiro |
| Abstract: | This paper examines how collateral and personal guarantees affect firms’ ex-post performance employing a propensity score matching estimation approach. Based on a unique firm-level panel data set of more than 500 small-and-medium-sized borrower firms in Japan, we find that borrowers that provide collateral to lenders experience larger increases in profitability and reductions in riskiness than borrowers that do not. The main channel through which the borrower enhances its profitability is cost-cutting restructuring. These findings are consistent with the hypothesis that collateral reduces moral hazard by providing borrowers with an incentive to enhance their creditworthiness. We find little evidence that improvements in collateralized firms’ performance are driven by the intensified monitoring on the part of lenders, or by borrowing firms’ access to larger amounts of credit. |
| Keywords: | collateral, moral hazard, propensity score |
| JEL: | D82 G21 G30 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:hit:cinwps:5&r=lab |
| By: | Simón, Hipólito (Universidad de Alicante); Ramos, Raul (University of Barcelona); Sanromá, Esteban (University of Barcelona) |
| Abstract: | We analyze the occupational mobility of immigrants between their origin countries and Spain and its determinants. We use microdata from the Encuesta Nacional de Inmigrantes to compute an internationally harmonized occupational status index (ISEI) that permits to quantify and properly analyze this kind of mobility. The obtained evidence shows that, in general, immigrants experience a strong occupational downgrading in Spain when compared to their origin countries. This fact is due to the strong downgrading they experience when entering the Spanish labour market and their low improvement in the following years. |
| Keywords: | immigration, occupational mobility, Spain |
| JEL: | J15 J24 J61 J62 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5581&r=lab |
| By: | Angel de la Fuente |
| Abstract: | This paper surveys the empirical literature on human capital and productivity and summarizes the results of my own work on the subject. On balance, the available evidence suggests that investment in education has a positive, significant and sizable effect on productivity growth.According to my estimates, moreover, the social returns to investment in human capital are higher than those on physical capital in most EU countries and in many regions of Spain. |
| Keywords: | human capital, productivity, growth, measurement error JEL Classification: O40, I20, O30, C19. |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:bbv:wpaper:1103&r=lab |