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on Labour Economics |
| By: | Nikita Céspedes Reynaga (Central Bank of Peru); Silvio Rendon (Department of Economics, Stony Brook University) |
| Abstract: | We estimate Frisch elasticity in a labor market with high job turnover. In a context where only around 18% of the employed labor force has formal and stable jobs, we perform a fixed effects estimation as proposed by MaCurdy (1981) with a Heckman correction for selection into unemployment . We identify the positive slope of the labor supply using firms' size as an instrumental variables for wages. We use Peruvian data from the Permanent Employment Survey of Lima. We find that neglecting wage endogeneity implies a downward sloping labor supply, while the job turnover bias, not accounting for job turnover, overestimates Frisch elasticity. We estimate Frisch elasticity at around 0.38, which indicates fairly adjustable wages and little reaction of hours of work to wage variations. Moreover, we find that the Frisch elasticity is decreasing in income and tended to increase in the last decade. |
| Keywords: | Labor Supply, Frisch Elasticity, Hours of Work, Job Turnover |
| JEL: | E24 J22 J24 J41 J60 J63 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:nys:sunysb:12-13&r=lab |
| By: | Derek Yu (Department of Economics, Universities of Stellenbosch and the Western Cape) |
| Abstract: | The persistently high unemployment rate has always been one of the most pressing socio-economic problems of the South African economy. There is a general consensus that unemployment is structural, as there is a mismatch between the skills demanded by employers for the available jobs and the skills supplied by the labour force seeking work. As there is an increase of demand for highly-skilled workers with the adoption of capital-intensive and technologically more advanced production processes, most of the unemployed are unskilled and not well educated. The unemployment rate is much higher amongst youths than in amongst the older workforce. Also, youths are less likely to find employment and employed youths are relatively more likely to be retrenched during recessions due to their lack of experience. The announcement by the Finance Minister in the February 2011 Budget Speech that a youth wage subsidy will be implemented in 2012 was based on the hope that the subsidy program would boost the labour demand for youths, and decrease youth unemployment. Hence, this paper first analyses the demographic and education characteristics of the youth labour force, employed and unemployed, using the 1995-2011 labour survey data released by Statistics South Africa. The paper then investigates the main causes of youth unemployment, such as skills mismatch, quality of education, lack of experience, expectations of the youths, and the impact of wage rigidities. The paper then discusses how the wage subsidy program works, as well as its potential merits and drawbacks. It is concluded that while a wage subsidy might be effective in facilitating the entry of young workers into the job market, it is not sufficient to increase and maintain youth employment. Various other issues need to be addressed, such as reducing and preventing early drop out from schools; improving the quality of education in former Black schools; more attention to critical subjects like Mathematics and Science to prevent skills mismatch; more emphasis on practical, skills-oriented, vocational training at higher education levels; curtailing restrictive labour legislation that results in wage rigidity, productivity stagnation or decline, and increase in indirect costs, which eventually discourage employers to employ youth workers; and more rapid economic growth that is employment elastic. |
| Keywords: | Youth, employment, unemployment, wage subsidy |
| JEL: | J00 J21 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers171&r=lab |
| By: | Lei Fang; Pedro Silos |
| Abstract: | This paper investigates the change in wages associated with a spell of unemployment. The novelty lies in using monthly data from the Survey of Income and Program Participation (SIPP) to analyze the dynamics of those wage changes across different business cycles. The level of education or the sector of re-employment affects the change in wages following an unemployment spell differently across different downturns. The degree of wage rigidity varies across recessions; wage changes pre- and post-unemployment are sometimes procyclical and sometimes countercyclical. These results may be useful for understanding the different aggregate employment dynamics observed across downturns and recoveries. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2012-15:x:1&r=lab |
| By: | Aleksandra Parteka (Gdansk University of Technology, Gdansk, Poland) |
| Abstract: | This paper proposes an alternative approach to the empirical study of wage gap between workers with different educational levels in the enlarged EU. The analysis is based on sectoral database, linking labor market statistics and trade data at the level of 12 manufacturing sectors in a group of 20 European countries: selected New Member States (NMS-5) and former EU-15 economies, in the period 1995-2005. The results of the empirical model suggest that wage inequality between workers with academic education and lower is associated mainly with domestic (and not foreign) labor market conditions and, to a lower extent, to trade forces. Degree of trade penetration affects skilled-unskilled wage gaps but we do not find significant wage effects of imports from less developed EU countries. The same result is confirmed when we consider trade in intermediates and outsourcing practices in Europe. |
| Keywords: | wage inequality, skills, integration |
| JEL: | C62 F16 J31 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:iro:wpaper:1204&r=lab |
| By: | Carrillo-Tudela, Carlos (University of Essex) |
| Abstract: | The objective of this paper is to construct and quantitatively assess an equilibrium search model with on-the-job search and general human capital accumulation. In the model workers enter the labour market with different abilities and firms differ in their productivities. Wages are dispersed because of search frictions and workers' productivity differentials. The model generates a simple (log) wage variance decomposition that is used to measure the importance of firm and worker productivity differentials, frictional wage dispersion and workers' sorting dynamics. I calibrate the model using a sample of young workers for the UK. I show that wage inequality among low skilled workers is mostly due to differences in their productivities. Among medium skilled workers frictional wage dispersion and sorting dynamics are, together, as important as workers' productivity differentials. Differences in firms' productivities are also an important source of wage inequality for both skill groups and account for a large share of frictional wage dispersion. Quantitatively the model is able to reproduce the observed cross-sectional wage distribution, the average wage-experience profile and the amount of frictional wage dispersion observed in the data as measured by the Mean-min ratio. |
| Keywords: | job search, human capital accumulation, wage dispersion, turnover |
| JEL: | J63 J64 J41 J42 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6949&r=lab |
| By: | Datta Gupta, Nabanita (Aarhus University); Lau, Daniel (Cornell University); Pozzoli, Dario (Aarhus University) |
| Abstract: | This paper investigates whether education and working in a physically demanding job causally impact temporary work incapacity, i.e. sickness absence, and permanent work incapacity, i.e. the inflow to disability via sickness absence. Our contribution is to allow endogeneity of both education and occupation by estimating a quasi-maximum-likelihood discrete factor model. Data on sickness absence and disability spells for the population of older workers come from the Danish administrative registers for 1998-2002. We generally find an independent role of both education and occupation on temporary work incapacity only. Having at least primary education reduces women's (men's) probability of temporary work incapacity by 16% (38%) while working in a physically demanding job increases it by 37% (26%). On the other hand, conditional on sickness absence, the effects of education and occupation on permanent work incapacity are generally insignificant. |
| Keywords: | work incapacity, education, occupation, factor analysis, discrete factor model |
| JEL: | I12 I20 J18 C33 C35 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6963&r=lab |
| By: | Hugo Benitez-Silva (Department of Economics, Stony Brook University); J. Ignacio Garcia-Perez (Universidad Pablo de Olavide and FEDEA); Sergi Jimenez-Martin Author-Email: sergi.jimenez@upf.edu (Universitat Pompeu Fabra, Barcelona GSE and FEDEA) |
| Abstract: | Unemployment rates in developed countries have recently reached levels not seen in a generation, and workers of all ages are facing increasing probabilities of losing their jobs and considerable losses in accumulated assets. These events have increased the reliance that most (older) workers have on public social insurance programs, exactly at a time that public finances are suffering from a large drop in contributions. Using administrative and household level data we empirically characterize a Life- Cycle model of retirement and claiming decisions in terms of the employment, wage, health, and mortality uncertainty faced by individuals. We analyze the role of three intertwined factors in the recent evolution of work and retirement benefits claiming behavior in the United States; namely, higher unemployment uncertainty, higher unemployment benefits, and wealth shocks. We find that higher employment uncertainty reduces work and increases early claiming, while higher unemployment benefits mildly reduce work and reduce claiming at early ages. Finally, wealth shocks increase both early claiming and work. When all these factors are combined, the final outcome is a mild decline in labor supply and little variation in early claiming. |
| JEL: | J14 J26 J65 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:nys:sunysb:12-12&r=lab |
| By: | Nabanita Datta Gupta (Department of Economics and Business, Aarhus University, Denmark); Daniel Lau (Cornell University, USA); Dario Pozzoli (Department of Economics and Business, Aarhus University, Denmark) |
| Abstract: | This paper investigates whether education and working in a physically demand- ing job causally impact temporary work incapacity, i.e. sickness absence, and permanent work incapacity, i.e. the inflow to disability via sickness absence. Our contribution is to allow endogeneity of both education and occupation by estimating a quasi-maximum-likelihood discrete factor model. Data on sickness absence and disability spells for the population of older workers come from the Danish administrative registers for 1998-2002. We generally find an independent role of both education and occupation on temporary work incapacity only. Hav- ing at least primary education reduces women's (men's) probability of temporary work incapacity by 16% (38%) while working in a physically demanding job in- creases it by 37% (26%). On the other hand, conditional on sickness absence, the effects of education and occupation on permanent work incapacity are generally insignificant. |
| Keywords: | Work incapacity, education, occupation, factor analysis, discrete factor model |
| JEL: | I12 I20 J18 C33 C35 |
| Date: | 2012–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2012-25&r=lab |
| By: | Andreas Leibbrandt; John A. List |
| Abstract: | One explanation advanced for the persistent gender pay differences in labor markets is that women avoid salary negotiations. By using a natural field experiment that randomizes nearly 2,500 job-seekers into jobs that vary important details of the labor contract, we are able to observe both the nature of sorting and the extent of salary negotiations. We observe interesting data patterns. For example, we find that when there is no explicit statement that wages are negotiable, men are more likely to negotiate than women. However, when we explicitly mention the possibility that wages are negotiable, this difference disappears, and even tends to reverse. In terms of sorting, we find that men in contrast to women prefer job environments where the ‘rules of wage determination’ are ambiguous. This leads to the gender gap being much more pronounced in jobs that leave negotiation of wage ambiguous. |
| JEL: | C93 J0 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18511&r=lab |
| By: | Tatsiramos, Konstantinos (University of Leicester); van Ours, Jan C. (Tilburg University) |
| Abstract: | With the emergence of the Great Recession unemployment insurance (UI) is once again at the heart of the policy debate. In this paper, we review the recent theoretical and empirical evidence on the labor market effects of UI design. We also discuss policy issues related to UI design, including the structure of benefits, the role of liquidity constraints and the pros and cons of a UI system in which the generosity of UI benefits is varying over the business cycle. Finally, we identify potential areas of future research. |
| Keywords: | labor market institutions, labor market policy, job search, unemployment dynamics, unemployment insurance |
| JEL: | J64 J65 J68 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6950&r=lab |
| By: | Schneeweis, Nicole (University of Linz); Skirbekk, Vegard (University of Rostock); Winter-Ebmer, Rudolf (University of Linz) |
| Abstract: | We study the relationship between education and cognitive functioning at older ages by exploiting compulsory schooling reforms, implemented in six European countries during the 1950s and 1960s. Using data of individuals aged 50+ from the Survey of Health, Aging and Retirement in Europe (SHARE), we assess the causal effect of education on old-age memory, fluency, numeracy, orientation and dementia. We find a positive impact of schooling on memory. One year of education increases the delayed memory score by about 0.3, which amounts to 16% of the standard deviation. Furthermore, for women, we find that more education reduces the risk of dementia. |
| Keywords: | compulsory schooling, instrumental variables, education, cognitive functioning, memory, aging, dementia |
| JEL: | I21 J14 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6958&r=lab |
| By: | Tatsiramos, Konstantinos; van Ours, Jan C |
| Abstract: | With the emergence of the Great Recession unemployment insurance (UI) is once again at the heart of the policy debate. In this paper, we review the recent theoretical and empirical evidence on the labor market effects of UI design. We also discuss policy issues related to UI design, including the structure of benefits, the role of liquidity constraints and the pros and cons of a UI system in which the generosity of UI benefits is varying over the business cycle. Finally, we identify potential areas of future research. |
| Keywords: | Job search; Labor market institutions; Labor market policy; Unemployment dynamics; Unemployment insurance |
| JEL: | J64 J65 J68 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9196&r=lab |
| By: | Su, Xuejuan (University of Alberta, Department of Economics); Kaganovich, Michael (Indiana University); Schiopu, Iona (University of Alberta, Department of Economics) |
| Abstract: | This paper analyzes the impact of college enrollment expansion on student academic achievements and labor market outcomes. When public policies promote “access” to college education, colleges adjust their curricula: Non-elite public colleges adopt a less demanding curriculum to accommodate the influx of low-ability students, benefiting them at the expense of middle-ability students. In response to the reduced competitive pressure for middle-ability students, private colleges adopt a more demanding curriculum to better serve their high-ability students, again at the expense of middle-ability students. The model offers an explanation to the observed U-shaped earnings growth profile among college-educated workers in the U.S. |
| Keywords: | curriculum; postsecondary education; enrollment expansion; income distribution |
| JEL: | H44 I21 I23 I24 J24 |
| Date: | 2012–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2012_025&r=lab |
| By: | Blasco, Sylvie; Crépon, Bruno; Kamionka, Thierry |
| Abstract: | We evaluate the impact of both on-the-job and out-of-employment training on the mobilities on the labour market. Using a French survey that provides work and training participation histories over a five-year period, we estimate a multi-spell multi-state transitions model with unobserved heterogeneity and treatment of initial conditions à la Wooldridge. This allows to take participation in programmes and their duration as endogenous. We allow training to have an impact up to 12 months after entry into a program, so that we study both current and past duration and state dependencies. We find that there are interdependencies between the two types of training. Participation in training has a lasting effect on the individual trajectories. Receiving on-the-job training increases the risk of separation, but both types of training increases the hazard rate to employment. |
| Keywords: | training; transition models; unobserved heterogeneity |
| JEL: | J64 C41 C10 J69 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpm:docweb:1210&r=lab |
| By: | Ricardo A. Madeira |
| Abstract: | Decentralization of the delivery of public services provision is an important governance reform recently witnessed in many developing countries. Public education has been one of the key public services devolved to lower level governments. This paper uses an exclusive and rich longitudinal data on primary schools to evaluate the effects of the decentralization reform implemented on the State of Sao Paulo, Brazil, on several indicators of school performance and school resources. Specific aspects of the Sao Paulo’s State education reform combined with the data available allow me to deal with some common identification issues encountered by previous empirical studies on the subject. I find conflicting results for different school quality measures; decentralization increased dropout rates and failure rates across all primary school grades but improved several school resources. Further empirical investigation suggests that the worsening of these school performance indicators for the two first grades was partially driven by the democratization of the school access promoted by the education reform. Evaluation of the distributive outcome of the reform suggests that its effects were more perverse for schools located on rural and poor areas. I also find evidence that decentralization widened the gap between the “good” and “bad” schools. Moreover, I find no evidence that the municipalities’ administrative experience affected the program’s outcome. |
| Keywords: | Decentralization of Public Services, Education Economics, School Quality and |
| JEL: | I2 I28 H43 H7 C21 |
| Date: | 2012–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:spa:wpaper:2012wpecon26&r=lab |
| By: | Turrini, Alessandro (European Commission) |
| Abstract: | This paper estimates the impact of fiscal consolidation on unemployment and job market flows across EU countries using a recent database of consolidation episodes built on the basis of a “narrative” approach (Devries et al., 2011). Results show that the impact of fiscal consolidation on cyclical unemployment is temporary and significant mostly for expenditure measures. As expected, the impact of fiscal policy shocks on job separation rates is much stronger in low-EPL countries, while high-EPL countries suffer from a stronger reduction in the rate at which new jobs are created. Since a reduced job-finding rate corresponds to a longer average duration of unemployment spells, fiscal policy shocks also tend to have a stronger impact on long-term unemployment if EPL is stricter. Results are broadly confirmed when using "top-down" fiscal consolidation measures based on adjusting budgetary data for the cycle. |
| Keywords: | fiscal consolidation, unemployment, job market flows, employment protection legislation, labour market reforms |
| JEL: | E62 J63 J65 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp47&r=lab |
| By: | Böhlmark, Anders (SOFI, Stockholm University); Lindahl, Mikael (Department of Economics, Uppsala University) |
| Abstract: | This paper evaluates average educational performance effects of an expanding independent- school sector at the compulsory level by assessing a radical voucher reform that was implemented in Sweden in 1992. Starting from a situation where all public schools were essentially local monopolists, the degree of independent schools has developed very differently across municipalities over time as a result of this reform. We regress the change in educational performance outcomes on the increase in the share of independent-school students between Swedish municipalities. We find that an increase in the share of independent-school students improves average performance at the end of compulsory school as well as long-run educational outcomes. We show that these effects are very robust with respect to a number of potential issues, such as grade inflation and pre-reform trends. However, for most outcomes, we do not detect positive and statistically significant effects until approximately a decade after the reform. This is notable, but not surprising given that it took time for independent schools to become more than a marginal phenomenon in Sweden. We do not find positive effects on school expenditures. Hence, the educational performance effects are interpretable as positive effects on school productivity. We further find that the average effects primarily are due to external effects (e.g., school competition), and not that independent-school students gain significantly more than public-school students. |
| Keywords: | School choice; independent schools; educational performance; external effects |
| JEL: | H40 I21 |
| Date: | 2012–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2012_019&r=lab |
| By: | Francine D. Blau; Lawrence M. Kahn |
| Abstract: | We review research on the impact of immigration on income distribution. We discuss routes through which immigration can affect income distribution in the host and source countries, including compositional effects and effects on native incomes. Immigration may affect the composition of skills among the residents of a country. Moreover, immigrants can, by changing relative factor supplies, affect native wage and employment rates and the return to capital. We then provide evidence on the level and recent increases in immigration to OECD countries and on the distribution of native and immigrant educational attainment. We next provide a decomposition of 1979-2009 changes in US wage inequality, highlighting the effects of immigration on workforce composition. We then consider the economic theory of the impact of immigration on income distribution, emphasizing labor market substitution and complementarity between natives and immigrants. Further, by changing job opportunities or child care availability, immigrants can affect family, as well as individual, income distribution. We review research methodologies used to estimate the impact of immigration on the native income distribution. These include the structural approach (estimating substitution and complementarity among factors of production, including capital and labor force groups) as well as the natural experiment approach (seeking exogenous sources of variation in immigration) to studying the labor market. We then discuss evidence on these questions for Austria, Britain, France, Germany, Hong Kong, Israel, Portugal, Spain and the United States, as well as the impact of emigration on source country income distribution. |
| JEL: | D33 J3 J61 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18515&r=lab |
| By: | Peter Mühlau (Institute for International Integration Studies, Trinity College Dublin); |
| Abstract: | How has the recession affected the employment and job quality of Polish migrants in Ireland? The paper analyse unique data of more than 600 Polish migrants in Dublin, that has been collected using respondent-driven sampling, to shed lights on this question. Based on the reconstruction of the employment histories of the respondents, the paper demonstrates that employment levels, occupational status and earnings have been surprisingly stable at the macro-level of the Polish community in Dublin between 2008 and 2010. Underlying this macro-stability is a high degree of individual transitions in and out of employment and of vertical earnings and occupational mobility. Up-to 50 percent of Polish migrants in 2008 may have seen a deterioration of their labour market position until 2010, while in the same period about 40 percent may have seen gains in terms of employment and occupational attainment. The position of Polish women improved strongly relative to Polish men in this period. The main reason is that men on particularly well-paid and prestigious jobs had a particular high risk of losing their job. Job losses among women were fewer and the quality of the lost jobs was poor relative to the average job women held in 2008. The study is the first longitudinal study of labour market and occupational attainment of immigrants in Ireland. Length: 33 pages |
| URL: | http://d.repec.org/n?u=RePEc:iis:dispap:iiisdp413&r=lab |
| By: | John Bailey Jones; Fang Yang |
| Abstract: | We document the growth in higher education costs and tuition over the past 50 years. To explain these trends, we develop a general equilibrium model with skill- and sector-biased technical change. We assume that higher education suffers from Baumol's (1967) service sector disease, in that the quantity of labor and capital needed to educate a student is constant over time. Finding the model's parameters through a combination of calibration and estimation, we show that it can explain the rise in college costs between 1961 and 2009, along with the increase in college attainment and the increase in the relative earnings of college graduates. We finish by using the model to perform a number of numerical experiments. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:nya:albaec:12-08&r=lab |
| By: | Monazza Aslam; Kim Lehrer |
| Abstract: | This paper investigates the relationship between skills acquisition and job characteristics using a panel dataset of individuals in urban Ghana by analyzing on-the-job skills acquisition and exploring the link between mathematics skills and jobs which involve the handling of money. These mathematics skills are important, not only, in the workplace but also more generally. Survey respondents were administered a short mathematics test involving a number of theoretical and practical math questions. The relationship between skills and jobs is identified by examining individuals who changed jobs between survey rounds while controlling for individual time invariant characteristics. We argue that the process of job choice in Ghana allows us to identify causal impacts. The findings show that money handling is positively associated with higher math skills for women. These results are not driven by differences in mathematics scores between self-employed individuals and wage employed individuals and are robust to changes in the classification of money handling jobs. Moreover, the findings show that working in a job involving the handling of money is positively associated with higher math scores among women with high levels of education. This suggests that individuals at the low end of the distribution of years of education are not acquiring mathematics skills through money handling jobs. It is only the 36% of women who are already quite highly educated in the Ghanaian context who are acquiring these skills on the job. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2012-15&r=lab |
| By: | Mussida, Chiara (Università Cattolica del Sacro Cuore); Pastore, Francesco (University of Naples II) |
| Abstract: | Theoretical reasoning justifies different signs of the relationship between the local variation in unemployment rates and the extent of workers reallocation. This paper aims to test different theoretical hypotheses in the case of Italy by using the longitudinal files of the Italian labour force survey over the years from 2004 to 2010. We find that labour turnover, as well as inflows and outflows separately, differ significantly at the regional level and are ceteris paribus positively related to the unemployment rate. In addition, we study the determinants of labour turnover across NUTS1 and NUTS2 geographical units and find that it correlates positively with structural change, as measured by the Lilien index, and negatively with the degree of industrial concentration, as measured by the Herfindahl index. Once we control for sectoral shifts and industrial concentration, we note a reduction of between 25 and 40% of the regional gap in labour turnover rates. This general conclusion is robust to the use of different control variables. |
| Keywords: | regional unemployment, labour turnover, labour reallocation, structural change |
| JEL: | C33 J63 P25 P52 R23 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6954&r=lab |
| By: | Steven Lugauer (Department of Economics, University of Notre Dame) |
| Abstract: | The cyclical volatility of U.S. gross domestic product suddenly declined during the early 1980s and remained low for over 20 years. I develop a labor search model with worker heterogeneity and match-specific costs to show how an increase in the supply of high-skill workers can contribute to a decrease in aggregate output volatility. In the model, firms react to changes in the distribution of skills by creating jobs designed specifically for high-skill workers. The new worker-firm matches are more profitable and less likely to break apart due to productivity shocks. Aggregate output volatility falls because the labor market stabilizes on the extensive margin. In a simple calibration exercise, the labor market based mechanism generates a substantial portion of the observed changes in output volatility. |
| Keywords: | Business Cycles, Skill Supply, Demographics |
| JEL: | E32 J24 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:nod:wpaper:005&r=lab |
| By: | Montizaan Raymond; Cörvers Frank; Grip Andries de; Dohmen Thomas (METEOR) |
| Abstract: | We document the importance of negatively reciprocal inclinations in labor relationships by showingthat a retrenchment of pension rights, which is perceived as unfair, causes a larger reduction injob motivation the stronger workers’ negatively reciprocal inclinations are. We exploit uniquematched survey and administrativedata on male employees in the public sector in the Netherlands and compare the job motivation ofemployees born in 1950, who faced a substantial retrenchment of their pension rights resultingfrom a pension reform in 2006, to that of slightly older employees who remain entitled to moregenerous pension benefits. Job motivation is significantly lower among negatively reciprocalemployees who were affected by the reform. The negative effect on job motivation is greater fornegative reciprocal employees born very shortly after the cut-off date of January 1, 1950, as wellas for those with many untreated colleagues, and who therefore arguably perceive the policy changeas being more unfair. We also find that the treatment effect is strongeramong workers who are more likely to hold their employer accountable for the drop in their pensionrights, that is, those who work for the national government. |
| Keywords: | labour economics ; |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umamet:2012053&r=lab |
| By: | Anja Oppermann |
| Abstract: | The extensive research on the impact of educational attainment on fertility behavior has been expanded by a new dimension. According to these recent findings, not only the level but also the field of education has to be taken into account. The field of education determines a great deal about labor market options and influences opportunities to combine employment and family life. The question this paper aims to answer is: How does the educational field influence the transition to parenthood of women and men in Western Germany? The German Socio Economic Panel (1984-2010) provides the data. Discrete time event history models are applied to examine the impact of the field of education on the transition to parenthood, looking at the time after graduation until a first child is born. Educational fields are grouped according to their most salient characteristic with regard to the share of women, the occupational specificity, the share of public-sector employment, and the share of part-time employment among people educated in the field. The models take the educational level into account and control for marital status, episodes of educational enrollment, and migration background. The results show that educational fields matter for the transition to a first birth only for women. For men, the results do not show a significant impact of educational fields on the transition rates to parenthood. However, they point at the importance of the educational level for the probability of men to become fathers. High transition rates are found among women educated in both female-dominated and male-dominated fields. The finding of low transition rates among women educated in public-sector fields come as a surprise, since, given the high workplace security in the public sector, they were expected to be among the women with high transition rates. |
| Keywords: | field of education, level of education, fertility, childlessness, Western Germany |
| JEL: | J12 J13 J16 I24 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp496&r=lab |
| By: | Elena Simonova (Certified General Accountants Association of Canada); Rock Lefebvre (Certified General Accountants Association of Canada) |
| Abstract: | In the aftermath of the recent recession, the issue of youth unemployment has rekindled significant unease with different levels of government, communities and the general public. In addition to the most common consequences of unemployment such as financial hardship and emotional distress, jobless youth may experience erosion of individual skills and knowledge. The erosion of skills may likewise be caused by underemployment which does not allow youth to utilize the full range of skills possessed. At the aggregated economic level, such an erosion of skills may disadvantage business in their ability to expand and compete. This paper aims to examine the level of hardship associated with youth unemployment and the presence of youth underemployment in the Canadian economy. The results of the analysis show a number of positive trends: the youth unemployment rate trends downward while expected demographic changes may further ease youth joblessness; youth unemployment is primarily short-lived and often reflects a transitory state between school and the labour market. On the other hand, youth underemployment is significant and manifests through the underutilization of skills and labour. The capacity of the economy to tap into the enlarged pool of better educated youth does not keep pace with the improvements in educational attainment; underutilization of youth skills is common and extensive in specific occupations; and the proportion of youth that are involuntary part-timers is on the rise. |
| Keywords: | youth unemployment, youth underemployment, youth skills, youth labour, jobless youth, educational attainment, underutilization, involuntary part-time worker |
| JEL: | J62 J64 J63 J13 J24 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:cga:wpaper:121003&r=lab |
| By: | Montizaan Raymond; Cörvers Frank; Grip Andries de; Dohmen Thomas (ROA rm) |
| Abstract: | We document the importance of negatively reciprocal inclinations in labor relationshipsby showing that a retrenchment of pension rights, which is perceived as unfair,causes a larger reduction in job motivation the stronger workers’ negatively reciprocalinclinations are. We exploit unique matched survey and administrative data on maleemployees in the public sector in the Netherlands and compare the job motivation ofemployees born in 1950, who faced a substantial retrenchment of their pension rightsresulting from a pension reform in 2006, to that of slightly older employees who remainentitled to more generous pension benefits. Job motivation is significantly lower amongnegatively reciprocal employees who were affected by the reform. The negative effecton job motivation is greater for negative reciprocal employees born very shortly afterthe cut-off date of January 1, 1950, as well as for those with many untreated colleagues,and who therefore arguably perceive the policy change as being more unfair. We alsofind that the treatment effect is stronger among workers who are more likely to holdtheir employer accountable for the drop in their pension rights, that is, those who workfor the national government. |
| Keywords: | labour economics ; |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umaror:2012015&r=lab |
| By: | J. Ignacio García Pérez; Victoria Osuna |
| Abstract: | This paper evaluates Spain's recent labour market reform concerning the reduction in severance pay from 45 to 33 days of wages per year of seniority and the introduction of a new subsidized permanent contract. We also compare this policy with the introduction of a single open-ended labour contract with increasing severance payments for all new hirings. We use an equilibrium search and matching model to generate the main properties of this segmented labour market. Our steady {state results show this reform will reduce unemployment (by 20%) and job destruction (by 29%). However, in terms of wage subsidies, the cost of implementing this reform will be very high. A cheaper and more effective way to decrease the duality in the labour market would be to eliminate temporary contracts and introduce a single contract. Unemployment and job destruction in this case would be reduced by 28% and 42%, respectively. Most interestingly, tenure distribution would be even smoother than under the designed reform: 21% more workers would end up having tenures of more than three years, and there would be 32% fewer one year contracts. The transition shows that both changes would benefit a majority of workers: only 8.1% would be jeopardized under the approved reform (5.8% in the transition to the single contract) due to improvement in job stability. |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaddt:2012-09&r=lab |
| By: | Stephen Redding (Princeton University); Oleg Itskhoki (Princeton University); Marc-Andreas Muendler (University of California, San Diego); Elhanan Helpman (Harvard University) |
| Abstract: | While neoclassical theory emphasizes the impact of trade on wage inequality between occupations and industries, more recent theories of firm heterogeneity point to the impact of trade on wage dispersion within occupations and industries. Using linked employer-employee data for Brazil, we show that much of the increase in wage inequality between 1986 and 1998 has occurred within sector-occupations; the increase in the within component of wage inequality is driven by wage dispersion across firms; and the change in wage dispersion between firms is related to trade participation. We then use an extension of the theoretical model from Helpman, Itskhoki, and Redding (2010a) to construct an econometric model of the effect of trade on inequality, which we estimate with Brazilian data. We show that the estimated model fits the data well, both in terms of some key moments as well as in terms of the overall distributions of wages and employment. International trade is important for this fit. In particular, we show that by shutting down the trade channel the estimated model is significantly less successful in matching the data. Finally, we quantify the contribution of the firm-based channel through which trade affects wage inequality. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed012:135&r=lab |
| By: | Montizaan, Raymond (ROA, Maastricht University); Cörvers, Frank (ROA, Maastricht University); de Grip, Andries (ROA, Maastricht University); Dohmen, Thomas (ROA, Maastricht University) |
| Abstract: | We document the importance of negatively reciprocal inclinations in labor relationships by showing that a retrenchment of pension rights, which is perceived as unfair, causes a larger reduction in job motivation the stronger workers' negatively reciprocal inclinations are. We exploit unique matched survey and administrative data on male employees in the public sector in the Netherlands and compare the job motivation of employees born in 1950, who faced a substantial retrenchment of their pension rights resulting from a pension reform in 2006, to that of slightly older employees who remain entitled to more generous pension benefits. Job motivation is significantly lower among negatively reciprocal employees who were affected by the reform. The negative effect on job motivation is greater for negative reciprocal employees born very shortly after the cut-off date of January 1, 1950, as well as for those with many untreated colleagues, and who therefore arguably perceive the policy change as being more unfair. We also find that the treatment effect is stronger among workers who are more likely to hold their employer accountable for the drop in their pension rights, that is, those who work for the national government. |
| Keywords: | reciprocity, job motivation, retrenchment of pension rights |
| JEL: | D63 J2 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6955&r=lab |
| By: | Joseph Lanfranchi (LEM - Laboratoire d'Économie Moderne - Université Paris II - Panthéon-Assas : EA4442, CEE - Centre d'études de l'emploi - Ministère de l'Enseignement supérieur et Recherche - Ministère du Travail, de l'Emploi et de la Santé); Sanja Pekovic (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris IX - Paris Dauphine, DMSP - Université Paris IX - Paris Dauphine) |
| Abstract: | The implementation of environmental standards can be facilitated by motivating workers with pro-social preferences. Therefore, we study if employees working for firms achieving registration for environmental-related standards are more likely to display positive attitudes toward their job, to be actively involved in their jobs and to donate effort. Using a French matched employer-employee database, we find that these "green employees" report a significantly higher feeling of usefulness and equitable recognition at work. Besides, they are more likely to work uncompensated overtime hours. Finally, if the adoption of environmental standards is shown to have no direct influence on job involvement, we expose how it indirectly impacts job involvement through the mediation of employees' feeling of usefulness and equitable recognition at work. |
| Keywords: | environmental-related standards; pro-social motivation; workers' attitudes and behavior. |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00744483&r=lab |
| By: | Cui, Yuling (Macquarie University, Sydney); Nahm, Daehoon (Macquarie University, Sydney); Tani, Massimiliano (Macquarie University, Sydney) |
| Abstract: | This paper investigates the determinants of employment choice of rural migrant workers across state-owned enterprises (SOEs) and various subtypes of non-state owned enterprises (non-SOEs) by taking into account unobservable characteristics that link the choice to migrate with the choice of employer. Using pooled cross-section data for 1995 and 2002, the results indicate that the choice of employment is positively related to unobserved determinants of migration. This result implies that estimating employment choices without controlling for migration status leads to biased estimates. Most rural migrants appear strongly pulled into non-SOEs because of the higher wages and despite longer working hours. The provision of pension benefits also positively motivates employees' choices. |
| Keywords: | rural migrant workers, employment choice, SOEs, non-SOEs, China |
| JEL: | C35 J21 J61 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6968&r=lab |
| By: | Frédéric DOCQUIER (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and FNRS); Çağlar ÖZDEN (World Bank); Christopher PARSONS (University of Oxford); Ehran ARTUC (World Bank) |
| Abstract: | The discourse concerning the mobility of human capital internationally typically evokes migratory patterns from poorer to relatively more wealthy countries and this focus is strongly reflected in the (brain drain) literature. This emphasis omits an important and as yet understudied aspect of the phenomena however, namely skill transfer to non-OECD and in particular, emerging nations. This paper contributes to the literature by first developing a new dataset of international bilateral migration stocks by gender and education level, which includes both OECD and non-OECD countries as destinations in 1990 and 2000. We then use pseudo-gravity model regressions to impute missing values where data are unavailable, such that we are able to provide, for the first time, a global assessment of human capital mobility. The comprehensiveness of the resulting matrices facilitates a more nuanced definition of emigration rates based on the concept of the natural labour force, which additionally considers both entries and exits of workers. |
| Keywords: | International migration, labor mobility, brain drain |
| JEL: | F22 J61 O15 |
| Date: | 2012–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2012022&r=lab |
| By: | Christian Dustmann (University College London and CReAM); Tommaso Frattini (Università degli Studi di Milano, CReAM, LdA and IZA); Anna Rosso (University College London and CReAM) |
| Abstract: | This paper analyses the effect of emigration from Poland around the time of EU accession on the Polish labour market. We develop a simple model that guides our empirical specification and provides a clear interpretation for our estimates. Focussing on the 1998–2007 period for Poland, we use a unique data set that contains information about household members who are currently living abroad, which allows us to develop region-specific emigration rates and estimate emigration’s effect on wages using within-region variation. Our results show that emigration from Poland was largest for workers with intermediate-level skills and that it is wages for this skill group that increased most. We also show that emigration led to a slight increase in wages overall but that workers at the low end of the skill distribution made no gains and may actually have experienced slight wage decreases. |
| Keywords: | Emigration, Wages, Impact. |
| JEL: | J31 J61 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1229&r=lab |
| By: | Géraldine Rieucau (Laboratoire d'Economie Dionysien - Université Paris 8 Saint-Denis); Marie Salognon (Centre d'Economie de la Sorbonne) |
| Abstract: | In France, one of ten recently-hired workers works in retailing. The literature provides evidence about the screening criteria used to fill low-wage vacancies in stores. However, neither the stage when criteria matter nor the forefront role of information channels (direct applications, word-of-mouth, employment agency and job ads) has been well explored. Drawing on 35 interviews conducted in 2010-2011, with actors involved in recruitment activites and with recently-hired workers in large stores in Greater Paris. This article explores the initial interaction between job seekers and recruiters. It is argued that the screening criteria vary according to the way employers received information about applicants and first interact with them (by mail, phone or face-to-face). This contribution highlights the importance of walk-in applications, which prioritize selection based on residence, appearances and availability. Changes in the first interaction impact the whole selection process and may change the profile of the workers hired. |
| Keywords: | Economy of conventions, French retailing, information channels, low-wage jobs, recruitment, screening criteria. |
| JEL: | B59 J60 J71 L81 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:12061&r=lab |
| By: | Tobias Caris (University of Marburg); Bernd Hayo (University of Marburg) |
| Abstract: | We investigate why female labour market participation is low in the Arab region. Utilising Akerlof and Kranton’s (2000) ‘identity economics’ approach, we show in a simple gametheoretic framework that women socialised in a traditional family environment violate their identities by taking a job. In the empirical analysis, we study the respective impact of two determinants of identity in the Arab region, Islam and cultural tradition. Employing two waves of the World Values Survey, we find significant evidence that identity affects female labour market participation. Moreover, our estimates suggest that in the Arab region, Muslim women do not participate in the labour market less than non-Muslim women, whereas those with strong traditional identities have a 7 percentage point lower probability of entering the labour market. |
| Keywords: | Female labour market participation, Arab region, Islam, Identity, Religion |
| JEL: | J16 J21 Z12 Z13 O53 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201241&r=lab |
| By: | Budría, Santiago (University of Madeira); Swedberg, Pablo (St. Louis University) |
| Abstract: | This article uses micro-data from the Spanish National Immigrant Survey to investigate the impact of Spanish language proficiency on immigrants' earnings. The results, based on Instrumental Variables (IV), point to a substantial earnings return to Spanish proficiency, of approximately 27%. This figure varies largely across educational groups, with high-qualified workers earning a premium of almost 50%. This conspicuous complementarity between formal qualifications and language skills poses a challenge for traditional language training policies, for these typically neglect the immigrants' heterogeneous educational background. |
| Keywords: | immigration, Spanish language proficiency, earnings, instrumental variables |
| JEL: | F22 J24 J61 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6957&r=lab |
| By: | Bartling, Björn; Fehr, Ernst; Schmidt, Klaus M. |
| Abstract: | In Bartling, Fehr and Schmidt (2012) we show theoretically and experimentally that it is optimal to grant discretion to workers if (i) discretion increases productivity, (ii) workers can be screened by past performance, (iii) some workers reciprocate high wages with high effort and (iv) employers pay high wages leaving rents to their workers. In this paper we show experimentally that the productivity increase due to discretion is not only sufficient but also necessary for the optimality of granting discretion to workers. Furthermore, we report representative survey evidence on the impact of discretion on workers’ welfare, confirming that workers earn rents. |
| JEL: | M5 J3 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:14193&r=lab |
| By: | Cervini-Plá, María; Silva, José I.; López-Villavicencio, Antonia |
| Abstract: | In this paper, we propose a matching and search model with adjustment costs in the form of labor disruption charges that can generate counter-cyclical real wages. Empirically, we use a measure of wage cyclicality based on the generalized impulse response function of real wages to a shock in a cycle measure. We provide evidence that wages in the United States are counter-cyclical during the first few quarters. The calibration and simulated results of the model match remarkably well the counter-cyclicality obtained from our empirical model. |
| Keywords: | Labor disruption costs; real wages; matching frictions; wage cyclicality |
| JEL: | E32 E24 J63 J32 |
| Date: | 2012–10–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:42366&r=lab |
| By: | David Masclet (University of Rennes1 - CREM UMR CNRS 6211, France and CIRANO, Montréal, Canada); Emmanuel Peterle (University of Rennes 1 - CREM UMR CNRS 6211, France); Sophie Larribeau (University of Rennes 1 - CREM UMR CNRS 6211, France) |
| Abstract: | We present a new experimental design that permits us to explore gender differences in both performance and compensation choice. We design a game in which participants are asked to choose between a flat wage and a tournament scheme and to perform under each scheme. Our data indicate that men and women of similar ability differ in both performance and compensation choice. Men are more likely to choose a tournament than a flat wage scheme. These findings reflect both higher women (men)‟s concerns for equality (competitive preferences) and stronger men‟s overconfidence. Our data also indicate significant gender differences in effort provision. Men increase significantly more their effort than women when moving from a flat wage to a tournament. More surprisingly, our data show that women provide significantly more effort than men under a flat wage scheme despite the absence of any penalty for shirking and the fastidious and boring dimension of the task. This gender gap remains highly significant after controlling for several individual and social preferences. As such, we believe that an interpretation in terms of gender differences in intrinsic motivation is the most consistent with all of our experimental findings. |
| Keywords: | PME, Experiment, Gender differences, Tournament Scheme, Flat Wage Scheme |
| JEL: | C91 J16 J31 M52 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:tut:cremwp:201236&r=lab |
| By: | Salas, J.M. Ian S.; Abrigo, Michael Ralph M.; Racelis, Rachel H. |
| Abstract: | <p>Financing of education in the Philippines is mainly by the government (public) and by households (private), and since the 1990s there has been a shift in the public/private mix in education financing toward higher private share. Between 2007 and 2040 the schooling age population of the Philippines is projected to continue to increase in size and the age structure to shift toward higher proportion in the age group that attend the tertiary school level. This paper presents results of simulations of aggregate education consumption or expenditures by age and by income group for two hypothetical scenarios: simulations using an alternative education financing mix (alternative to the 2007 financing mix); and simulations using the 2040 school-age population (in place of the 2007 population).</p><p>The aggregate age profile simulations for the two scenarios are then compared with the 2007 actual aggregate age profiles to derive implications of the two sets of change on the education expenditures of the different income groups. The comparisons showed that the two changes, shift in education financing mix toward higher private share and change in school-age population age structure from 2007 to 2040, would among others result to reduced share of education resources and higher per capita private education cost for the bottom income tercile group.</p> |
| Keywords: | Philippines, National Transfer Accounts, education expenditures by age, education financing, education expenditures by income group |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:phd:dpaper:dp_2012-34&r=lab |
| By: | Díaz Serrano, Lluís; Meix Llop, Enric |
| Abstract: | The low quality of education is a persistent problem in many developed countries. Parallel to in the last decades exists a tendency towards decentralization in many developed and developing countries. Using micro data from the Programme for International Student Assessment (PISA) referred to 22 countries, we test whether there exists an impact of fiscal and political decentralization on student performance in the areas of mathematics, reading skills and science. We observe that fiscal decentralization exerts an unequivocal positive effect on students’ outcomes in all areas, while the effect of political decentralization is more ambiguous. On the one hand, the capacity of the subnational governments to rule on its region has a positive effect on students’ performance in mathematics. On the other hand, the capacity to influence the country as a whole has a negative impact on mathematics achievement. As a general result, we observe that students’ performance in Mathematics is more sensible to these exogenous variations than in Sciences and reading skills. Keywords: School outcomes, PISA, fiscal decentralization, political decentralization JEL codes: H11, H77, I21 |
| Keywords: | Programa Internacional de Evaluación de Estudiantes (PISA), Rendiment escolar, Descentralització administrativa, Relacions intergovernamentals, 37 - Educació. Ensenyament. Formació. Temps lliure, |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:urv:wpaper:2072/203156&r=lab |
| By: | Himmler, Oliver; Koenig, Tobias |
| Abstract: | A positive view of the self is often portrayed as a valuable asset in the sense that it can have performance enhancing properties. Using data on self-esteem - the most fundamental manifestation of positive self evaluations - and high school grade point averages of American students we produce results in line with this idea and find a positive link between favorable self-evaluations and higher levels of educational performance. However, when we exploit exogenous variation in self-esteem due to adolescent skin problems in order to account for the possible endogeneity of self-esteem, this finding is reversed and we obtain a negative effect on performance. We discuss mechanisms that may generate such an adverse causal effect of positive self-evaluations, and conclude that self-esteem and effort need not always be complements but can actually be substitutes. |
| Keywords: | Self-evaluations, Self-esteem, Non-cognitive Skills, Human Capital, Performance |
| JEL: | I2 J24 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-507&r=lab |
| By: | Kirk Doran (Department of Economics, University of Notre Dame) |
| Abstract: | Do employers substitute adults for children, or do they treat them as complements? Using data from a Mexican schooling experiment, I find that decreasing child farm work is accompanied by increasing adult labor demand. This increase was not caused by treatment money reaching farm employers: there were no significant increases in harvest prices and quantities, non-labor inputs, or non-farm labor supply. Furthermore, coordinated movements in price and quantity can distinguish this increase in demand from changes in supply induced by the treatment's income effects. Thus, declining child supply caused increasing adult demand: employers substituted adults for children. |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:nod:wpaper:016&r=lab |
| By: | Sala, Luca (Department of Economics and IGIER); Söderström, Ulf (Monetary Policy Department, Central Bank of Sweden); Trigari, Antonella (Department of Economics and IGIER) |
| Abstract: | We use an estimated monetary business cycle model with search and matching frictions in the labor market and nominal price and wage rigidities to study four countries (the U.S., the U.K., Sweden, and Germany) during the financial crisis and the Great Recession. We estimate the model over the period prior to the financial crisis and use the model to interpret movements in GDP, unemployment, vacancies, and wages in the period from 2007 until 2011. We show that contractionary financial factors and reduced efficiency in labor market matching were largely responsible for the experience in the U.S. Financial factors were also important in the U.K., but less so in Sweden and Germany. Reduced matching efficiency was considerably less important in the U.K. and Sweden than in the U.S., but matching efficiency improved in Germany, helping to keep unemployment low. A counterfactual experiment suggests that unemployment in Germany would have been substantially higher if the German labor market had been more similar to that in the U.S. |
| Keywords: | Business cycles; financial crisis; labor market matching; Beveridge curve |
| JEL: | E24 E32 |
| Date: | 2012–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:rbnkwp:0264&r=lab |
| By: | Wenbiao Cai; Manish Pandey |
| Abstract: | Labor regulations in India increase the cost of hiring labor for larger establishments and have been cited as an important reason for the lack of mid-sized establishments in the manufacturing sector. Using data for India, we calibrate a two-sector model in which agents differ in their managerial ability in manufacturing. In the presence of size-dependent labor regulations, the model generates the observed employment distribution across manufacturing establishments in India. In a counterfactual exercise, removing the regulations increases aggregate output per worker by 2.3% and also increases labor productivity in agriculture relative to manufacturing by 4%. We find that labor regulations in manufacturing have a detrimental effect on the productivity of the agricultural sector and hence impede the process of structural transformation. |
| JEL: | K31 O11 O40 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:win:winwop:2012-03&r=lab |
| By: | Alzúa, María Laura (CEDLAS-UNLP); Cruces, Guillermo (CEDLAS-UNLP); Ripani, Laura (Inter-American Development Bank) |
| Abstract: | This study looks at the effect of welfare programs on work incentives and the adult labor supply in developing countries. The analysis builds on the experimental evaluations of three programs implemented in rural areas: Mexico's PROGRESA, Nicaragua's RPS and Honduras' PRAF. Comparable results for the three countries indicate that the effects that the programs have had on the labor supply of participating adults have been mostly negative but are nonetheless small and not statistically significant. However, the evidence does point to the presence of other effects on labor markets. In the case of PROGRESA, there is a small positive effect on the number of hours worked by female beneficiaries and a sizeable increase in wages among male beneficiaries and a resulting increase in household labor income. Moreover, PROGRESA seems to have reduced female labor-force participation in ineligible households. These results imply that large-scale interventions may have broader equilibrium effects. |
| Keywords: | welfare programs, income support, labor supply, work incentives, conditional cash transfers, randomized control trials, developing countries |
| JEL: | J08 J22 I38 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6959&r=lab |
| By: | Sebastian Goerg (Florida State University, Department of Economics); Sebastian Kube (University of Bonn, Department of Economics) |
| Abstract: | In a randomized field experiment, we investigate the connection between work goals, monetary incentives, and work performance. Employees are observed in a natural work environment where they have to do a simple, but effort-intense task. Output is perfectly observable and workers are paid for performance. While a regular piece-rate contract serves as a benchmark, in some treatments workers are paid a bonus conditional on reaching a pre-specified goal. We observe that the use of personal work goals leads to a significant output increase. The positive effect of goals not only prevails if they are self-chosen by the workers, but also if goals are set exogenously by the principal – although in the latter case, the exact size of the goal plays a crucial role. Strikingly, the positive effect of self-chosen goals persists even if the goal is not backed up by monetary incentives. We propose a novel incentive contract where – through the choice of a personal work goal – workers themselves determine the risk and the size of their bonus payment at the same time. |
| Keywords: | Field experiment, Goal setting, monetary incentives, bonus payments, pay-for-performance contracts, workplace behavior |
| JEL: | J33 C93 D01 A12 M52 D03 D24 J24 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2012_19&r=lab |
| By: | Sylvie Démurger (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); Li Shi (School of Economics and Business Administration - Beijing Normal University / Beijing) |
| Abstract: | This paper explores the rural labor market impact of migration in China using crosssectional data on rural households for the year 2007. A switching probit model is used to estimate the impact of belonging to a migrant-sending household on the individual occupational choice categorized in four binary decisions : farm work, wage work, self-employment and housework. The paper then goes on to estimate how the impact of migration differs across different types of migrant households identified along two additional lines : remittances and migration history. Results show that individual occupational choice in rural China is responsive to migration, at both the individual and the family levels, but the impacts differ : individual migration experience favors subsequent local off-farm work, whereas at the family level, migration drives the left-behinds to farming rather than to off-farm activities. Our results also point to the interplay of various channels through which migration influences rural employment patterns. |
| Keywords: | labor migration; labor supply; remittances; temporary migration; left-behind; China |
| Date: | 2012–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00744438&r=lab |
| By: | Bassanini, Andrea; Garnero, Andrea |
| Abstract: | Exploiting a unique dataset including cross-country comparable hiring and separation rates by type of transition for 24 OECD countries, 23 business-sector industries and 13 years, we study the effect of dismissal regulations on different types of gross worker flows, defined as one-year transitions. We use both a difference-in-difference approach – in which the impact of regulations is identified by exploiting likely cross-industry differences in their impact – and standard time-series analysis – in which the effect of regulations is identified through regulatory changes over time. We find that the more restrictive the regulation, the smaller is the rate of within-industry job-to-job transitions, in particular towards permanent jobs. By contrast, we find no significant effect as regards separations involving an industry change or leading to non-employment. The extent of reinstatement in the case of unfair dismissal appears to be the most important regulatory determinant of gross worker flows. We also present a large battery of robustness checks that suggest that our findings are robust. |
| Keywords: | gross worker flows; industry-specific human capital; job-to-job transitions; EPL; reinstatement; cross-country data |
| JEL: | J23 J24 J62 J63 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpm:docweb:1211&r=lab |
| By: | Erhan Artuç; John McLaren |
| Abstract: | A number of authors have argued that a worker's occupation of employment is at least as important as the worker's industry of employment in determining whether the worker will be hurt or helped by international trade. We investigate the role of occupational mobility on the effects of trade shocks on wage inequality in a dynamic, structural econometric model of worker adjustment. Each worker in our specification can switch either industry, occupation, or both, paying a time-varying cost to do so in a rational-expectations optimizing environment. We find that the costs of switching industry and occupation are both high, and of similar magnitude, but in simulations we find that a worker's industry of employment is much more important than either the worker's occupation or skill class in determining whether or not she is harmed by a trade shock. |
| JEL: | E24 F13 F16 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18503&r=lab |
| By: | Montserrat Vilalta-Bufi(Universitat de Barcelona); Ausias Ribo (Universitat de Barcelona) (Universitat de Barcelona) |
| Abstract: | There is a vast literature on intergenerational mobility in sociology and economics. Similar interest has emerged for the phenomenon of over-education in both disciplines. There are no studies, however, linking these two research lines. We study the relationship between social mobility and over-education in a context of educational expansion. Our framework allows for the evaluation of several policies, including those aecting social segregation, early intervention programs and the power of unions. Results show the evolution of social mobility, over-education, income inequality and equality of opportunity under each scenario. |
| Keywords: | matching model, over-education, intergenerational cultural transmission, good jobs, aggregate productivity |
| JEL: | J62 J24 I24 J21 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:bar:bedcje:2012284&r=lab |
| By: | Robert A. Moffitt |
| Abstract: | The decline in the employment-population ratios for men and women over the period 2000-2007 prior to the Great Recession represents an historic turnaround in the evolution of U.S. employment. The decline is disproportionately concentrated among the less educated and younger groups within the male and female populations and, for women, disproportionately concentrated among the unmarried and those without children. About half of men’s decline can be explained by declines in wage rates and by changes in nonlabor income and family structure influences, but the decline among women is more difficult to explain and requires distinguishing between married and unmarried women and those with and without children, who have each experienced quite different wage and employment trends. Neither taxes nor transfers appear likely to explain the employment declines, with the possible exception of the Supplemental Nutrition Assistance Program. Other influences such as the minimum wage or health factors do not appear to play a role, but increases in incarceration could have contributed to the decline among men. |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:jhu:papers:604&r=lab |
| By: | Pao-Li Chang (Singapore Management University, School of Economics); Fali Huang (Singapore Management University, School of Economics) |
| Abstract: | This paper presents a theory on the endogenous choice of a country's education policy and the two-way causal relationship between trade and education systems. The setting of a country's education system determines its talent distribution and comparative advantage in trade; the possibility of trade by raising the returns to the sector of comparative advantage in turn induces countries to further differentiate their education systems and reinforces the initial pattern of comparative advantage. Specifically, the Nash equilibrium choice of education systems by two countries interacting strategically are necessarily more divergent than their autarky choices, although the difference is still less than what is socially optimal for the world. We provide some preliminary empirical evidence on the relationship between education system and talent distribution. |
| Keywords: | Education System, Talent Distribution, Comparative Advantage, Trade Pattern |
| JEL: | F16 I20 J24 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:siu:wpaper:32-2012&r=lab |
| By: | Marco de Pinto (University of Trier) |
| Abstract: | The contribution of this paper is to derive an optimal redistribution scheme for trade gains in the case of a governments objective function that explicitly accounts for the equity-efficiency trade-o¤. The government pays unemployment benefits (UB) either .financed by a wage tax, a payroll tax or a pro.t tax paid by exporters only. Using a Melitz -type framework with unionized labor markets and heterogeneous workers we show that there is a clear-cut ranking of the redistribution schemes in terms of welfare level: 1. UB .financed by a pro.t tax paid by exporters, 2. UB .financed by a wage tax, 3. UB .financed by a payroll tax. |
| Keywords: | trade liberalization, heterogeneous firms, trade unions, income inequality, unemployment benefits, taxes |
| JEL: | F1 F16 H2 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201244&r=lab |
| By: | German Cubas; Pedro Silos |
| Abstract: | Using the Survey of Income and Program Participation (SIPP), we document a significant and positive association between earnings risk (both permanent and transitory) and the level of earnings across 21 industries. We propose an equilibrium framework to analyze the interplay between earnings volatility and the distribution of skills across workers in determining a relationship between earnings and risk. We use the model to decompose how much of the empirical correlation represents compensation for risk and how much represents selection. The positive association between permanent risk and earnings is compensation for risk, but selection is responsible for the observed relationship between temporary risk and the level of earnings. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2012-15&r=lab |
| By: | Laun, Lisa (IFAU - Institute for Evaluation of Labour Market and Education Policy) |
| Abstract: | This paper analyzes the effect of two age-targeted policy initiatives to delay retirement that were simultaneously implemented in Sweden in 2007: an earned income tax credit and a payroll tax credit. Both policies were targeted at workers aged 65 or above at the beginning of the tax year. The paper exploits that the special rules for elderly were governed by the year of birth while the social security system is governed by age retirement,i.e., the day of birth, in analyzing the effect of the new policies. The results suggest that the age-targeted tax credits increased employment in the year following the 65th birthday by 1.5 percentage points among individuals with annual earnings above the 2007 tax liability threshold three to five years earlier. An analysis of fiscal implications indicates, however, that the increase in employment was not large enough to offset the implied decrease in tax revenues. |
| Keywords: | Labor supply; retirement; earned income tax credit; payroll taxes |
| JEL: | H24 J14 J18 J21 |
| Date: | 2012–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2012_018&r=lab |
| By: | Mette Asmild (Institute of Food and Resource Economics, University of Copenhagen); Kurt Nielsen (Institute of Food and Resource Economics, University of Copenhagen); Peter Bogetoft (Department of Economics, Copenhagen Business School) |
| Abstract: | This paper analysis the competitiveness of Danish dairy farmers relative to dairy farmers in other Northern European countries. We use individual farm accounts data from the European Commission’s Farm Accountancy Data Network (FADN) and have an average of 1665 observations per year in the period from 2002 to 2008. In all years, the hourly pay for labour is highest in Denmark and the difference is increasing, especially in 2007 and 2008. We apply Data Envelopment Analysis in a new way to capture the effect on the competitiveness from these differences in labour costs. We compare the distributions of efficiency scores in different countries to assess their relative competitiveness. To analyze the effect of labour costs we apply two different DEA models; one including the labour input as hours worked and the other including labour costs. This way we capture the effect of labour costs on the differences in average efficiencies between countries. The results shows that the Danish dairy farmers, on average, were the most economically efficient in Northern Europe in 2007 and 2008. We find that the effect of labour costs for the Danish dairy farmers is decreasing during the study period despite of the salary differences increasing. In 2002 the negative impact of having the highest hourly pay was an average 4.7 percentage points whereas it in 2008 was only 0.6 percentage points.This indicates that the Danish dairy farmers have been highly successful in adapting to having the highest, and increasing, hourly labour costs in Northern Europe. |
| Keywords: | International benchmarking, Data Envelopment Analysis, Agriculture, FADN data |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:foi:msapwp:01_2012&r=lab |