|
on Labour Economics |
| By: | Peter A. Diamond |
| Abstract: | Whenever unemployment stays high for an extended period, it is common to see analyses, statements, and rebuttals about the extent to which the high unemployment is structural, not cyclical. This essay views the Beveridge Curve pattern of unemployment and vacancy rates and the related matching function as proxies for the functioning of the labor market and explores issues in that proxy relationship that complicate such analyses. Also discussed is the concept of mismatch. |
| JEL: | E24 E32 E6 J23 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18761&r=lab |
| By: | Mike Brewer (Institute for Fiscal Studies and ISER, Essex University); Monica Costa Dias (Institute for Fiscal Studies and Institute for Fiscal Studies); Jonathan Shaw (Institute for Fiscal Studies) |
| Abstract: | Personal taxes and benefits affect the incentive to work over the lifecycle by altering income-age profiles, insuring against adverse shocks, and changing the returns to human capital. Previous work investigating the impact of taxes and benefits on work incentives has tended to ignore these dynamic considerations. In this paper, we use a dynamic model to show how a lifecycle perspective alters our impression of the effect of the tax and benefit system on female work incentives. We describe how work incentives change over the life and show how they depend on lifecycle circumstances. We also devise a forward-looking measure of work incentives that incorporates all the dynamic considerations likely to affect work decisions at any given age. We find that individuals experience considerable variability in work incentives across life that outweighs the variability across individuals. Changes pattern of family types across life is key to explaining these patterns: work incentives vary dramatically depending on family composition, and most women experience a number of different family types during the course of their lives. We also find that differences in family type are an important explanation for why static and forwardlooking PTRs diverge, though this is more to do with differences in how women in families with different compositions behave. |
| Keywords: | female labour supply, lifecycle, work incentives, taxes |
| JEL: | H24 I24 I38 J22 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:13/01&r=lab |
| By: | Jorge De la Roca (New York University); Diego Puga (CEMFI, Centro de Estudios Monetarios y Financieros) |
| Abstract: | Individual earnings are higher in bigger cities. We consider three reasons: spatial sorting of initially more productive workers, static advantages from workers’ current location, and learning by working in bigger cities. Using rich administrative data for Spain, we find that workers in bigger cities do not have higher initial ability as reflected in fixed effects. Instead, they obtain an immediate static premium and accumulate more valuable experience. The additional value of experience in bigger cities persists after leaving and is stronger for those with higher initial ability. This explains both the higher mean and greater dispersion of earnings in bigger cities. |
| Keywords: | Learning, city size, earnings premium, agglomeration economies. |
| JEL: | R10 R23 J31 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2013_1301&r=lab |
| By: | Judith K. Hellerstein; Mark J. Kutzbach; David Neumark |
| Abstract: | We test for evidence of spatial, residence-based labor market networks. Turnover is lower for workers more connected to their neighbors generally and more connected to neighbors of the same race or ethnic group. Both results are consistent with networks producing better job matches, while the latter could also reflect preferences for working with neighbors of the same race or ethnicity. For earnings, we find a robust positive effect of the overall residence-based network measure, whereas we usually find a negative effect of the same-group measure, suggesting that the overall network measure reflects productivity-enhancing positive network effects, while the same-group measure may capture a non-wage amenity. |
| JEL: | J15 R23 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18763&r=lab |
| By: | Lawrence F. Katz; Robert A. Margo |
| Abstract: | This paper examines shifts over time in the relative demand for skilled labor in the United States. Although de-skilling in the conventional sense did occur overall in nineteenth century manufacturing, a more nuanced picture is that occupations “hollowed out”: the share of “middle-skill” jobs – artisans – declined while those of “high-skill” – white collar, non-production workers – and “low-skill” – operatives and laborers increased. De-skilling did not occur in the aggregate economy; rather, the aggregate shares of low skill jobs decreased, middle skill jobs remained steady, and high skill jobs expanded from 1850 to the early twentieth century. The pattern of monotonic skill upgrading continued through much of the twentieth century until the recent “polarization” of labor demand since the late 1980s. New archival evidence on wages suggests that the demand for high skill (white collar) workers grew more rapidly than the supply starting well before the Civil War. |
| JEL: | J23 N11 N12 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18752&r=lab |
| By: | Patrick Kline; Enrico Moretti |
| Abstract: | Many countries have policies aimed at creating jobs in depressed areas with high unemployment rates. In standard spatial equilibrium models with perfectly competitive labor and land markets, local job creation efforts are distortionary. We develop a stylized model of frictional local labor markets with the goal of studying the efficiency of unemployment differences across areas and the potential for place based policies to correct local market failures. Our model builds on the heavily studied Diamond - Mortensen - Pissarides framework, adapted to a local labor market setting with a competitive housing market. The result is a simple search analogue of the classic Roback (1982) model that provides a tractable environment for studying the effects of local job creation efforts. In the model, workers are perfectly mobile and the productivity of worker-firm matches may vary across metropolitan areas. In equilibrium, higher local productivity results in higher nominal wages, higher housing costs, and lower unemployment rates. Although workers can move freely to arbitrage away differences in expected utility across metropolitan areas, equilibrium unemployment rates are not equalized across space. We find that if hiring costs are excessive, firms may post too few vacancies. This problem may be offset via local hiring subsidies of the sort found in many place based policies. The optimal hiring subsidy is city specific in the sense that it depends upon the local productivity level. |
| JEL: | J48 J6 J61 J64 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18758&r=lab |
| By: | Bruno Crépon (CREST); Esther Duflo (MIT); Marc Gurgand (PSE & CREST); Roland Rathelot (CREST); Philippe Zamora (CREST) |
| Abstract: | This paper reports the results from a randomized experiment designed to evaluate the direct and indirect (displacement) impacts of job placement assistance on the labor market outcomes of young, educated job seekers in France. We use a two-step design. In the first step, the proportions of job seekers to be assigned to treatment (0%, 25%, 50%, 75% or 100%) were randomly drawn for each of the 235 labor markets (e.g. cities) participating in the experiment. Then, in each labor market, eligible job seekers were randomly assigned to the treatment, following this proportion. After eight months, eligible, unemployed youths who were assigned to the program were significantly more likely to have found a stable job than those who were not. But these gains are transitory, and they appear to have come partly at the expense of eligible workers who did not benefit from the program, particularly in labor markets where they compete mainly with other educated workers, and in weak labor markets. Overall, the program seems to have had very little net benefits. |
| Keywords: | job placement, counseling, displacement effects, randomized experiment |
| JEL: | J68 J64 C93 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:crs:wpaper:2012-28&r=lab |
| By: | Jeremy Lise (University College London and IFS); Costas Meghir (Cowles Foundation, Yale University); Jean-Marc Robin (Sciences Po, Paris and University College of London) |
| Abstract: | We develop an empirical search-matching model which is suitable for analyzing the wage, employment and welfare impact of regulation in a labor market with heterogeneous workers and jobs. To achieve this we develop an equilibrium model of wage determination and employment which extends the current literature on equilibrium wage determination with matching and provides a bridge between some of the most prominent macro models and microeconometric research. The model incorporates productivity shocks, long-term contracts, on-the-job search and counter-offers. Importantly, the model allows for the possibility of assortative matching between workers and jobs due to complementarities between worker and job characteristics. We use the model to estimate the potential gain from optimal regulation and we consider the potential gains and redistributive impacts from optimal unemployment insurance policy. The model is estimated on the NLSY using the method of moments. |
| Keywords: | Matching, Equilibrium wage distributions, Job mobility, Simulated method of moments, MCMC |
| JEL: | J3 J6 J64 J65 J68 C15 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1886&r=lab |
| By: | Carlos Carrillo-Tudela; Ludo Visschers |
| Abstract: | We build an analytically and computationally tractable stochastic equilibrium model of unemployment in heterogeneous labor markets. Facing search frictions within markets and reallocation frictions between markets, workers endogenously separate from employment and endogenously reallocate between markets, in response to changing aggregate and local conditions. Empirically, using the 1986-2008 SIPP panels, we document the occupational mobility patterns of the unemployed, finding notably that occupational change of unemployed workers is procyclical. The heterogeneous-market model yields highly volatile countercyclical unemployment, and is simultaneously consistent with procyclical reallocation, countercyclical separations and a negativelysloped Beveridge curve. Moreover, the model exhibits unemployment duration dependence, which (when calibrated to long-term averages) responds realistically to the business cycle, creating substantial longer-term unemployment in downturns. Finally, the model is also consistent with different employment and reallocation outcomes as workers gain experience in the labor market, on average and over the business cycle. |
| Keywords: | Unemployment, Business Cycle, Search, Endogenous Separations, Reallocation, Occupational Mobility |
| JEL: | E24 E30 J62 J63 J64 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we1302&r=lab |
| By: | Carolina Fugazza |
| Abstract: | In this paper we focus on the relative role of job finding and exit in shaping the employment risk over the life cycle. Using Italian labor market data we measure the employment risk resulting from the transitions implied in the empirical duration of employment and unemployment spells. Our results evidence that the life cycle employment probability profiles is hump shaped with a peak at adult age and that this dynamics is mainly driven by the “U” –age profile of transitions from employment to unemployment. Moreover, we find that differences in job finding probability are mainly responsible for heterogeneity in the employment risk across working groups. |
| Keywords: | Employment risk, Duration, Heterogeneity, Semi-Markov Process |
| JEL: | C41 J62 J64 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:280&r=lab |
| By: | Jay Stewart (U.S. Bureau of Labor Statistics) |
| Abstract: | School-age children need 10-11 hours of sleep per night. It has been well-documented that lack of sleep leads to diminished cognitive performance and that people who sleep less are more likely to be overweight or obese. I use data from the American Time Use Survey (ATUS) to examine two factors that can potentially influence the amount of time children sleep: school and maternal employment. I find that school-age children sleep less when school is in session than during the summer, and that they get less sleep on school nights than on non-school nights. Children go to bed about 38 minutes earlier on school nights, but wake up about 72 minutes earlier on school days. This translates into about 34 minutes less sleep on school nights compared with non-school nights, and implies that these children have a cumulative sleep deficit of over two-and-a-half hours by the time they arrive at school Friday morning. In addition to the lost sleep time, the earlier wake-up times on school days appear to disrupt children’s natural sleep cycles. Maternal employment affects children’s sleep time in the summer, because children wake up earlier on days that their mothers work. But during the school year, maternal employment effects are dominated by school effects. |
| Keywords: | Sleep; school start times; maternal employment; time use; |
| JEL: | J22 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:bls:wpaper:ec130010&r=lab |
| By: | Etienne Lehmann (CREST); François Marical (INSEE); Laurence Rioux (CREST(INSEE)) |
| Abstract: | We estimate the responses of gross labor income with respect to marginal and average net-of-tax rates in France over the period 2003-2006. We exploit a series of reforms to the income-tax and payroll-tax schedules affecting individuals who earn less than twice the minimum wage. Our estimate for the elasticity of gross labor income with respect to the marginal net-of-income-tax rate is around 0.2, while we find no response to the marginal net-of-payroll-tax rate. The elasticity with respect to the average net-of-tax rate is not significant for the income-tax schedule, while it is close to -1 for the payroll-tax schedule. A plausible explanation is the existence of significant labor supply responses to the income-tax schedule, combined with sticky posted wages (i.e., the gross labor income minus payroll taxes divided by hours worked). Finally, the effect of the net-of-income-tax rate seems to be driven by participation decisions, in particular those of married women. |
| Keywords: | Labor income, Payroll tax, Income tax |
| JEL: | H24 H31 J22 J38 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:crs:wpaper:2012-24&r=lab |
| By: | Sylvie Blasco (CREST); Barbara Pertold-Gebicka (Aarhus Université) |
| Abstract: | In this paper we investigate how active labour market policy programmes affect firms' hiring strategies and, eventually, firms' performance. We focus on counseling and monitoring which may reduce search costs for employers, but which may have ambiguous effect on the employer- employee matching quality and thus on firms' performance. Using a large scale experiment which was conducted in Denmark in 2005-2006 and induced a greater provision of activation, we find that small firms hiring in the districts where the social experiment was conducted changed their hiring practices in favor of unemployed workers and experienced greater turnover than the other firms. Treated firms also experienced no change or a marginal reduction in value added and total factor productivity during the first years after the experiment. These results are consistent with the idea that monitoring creates compulsion effects which counteract the possible improvement in the matching process expected from job search assistance. |
| Keywords: | active labour market programmes, counseling and monitoring,hiring decisions,firms performance |
| JEL: | C21 J63 J68 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:crs:wpaper:2012-27&r=lab |
| By: | Franziska Lottmann |
| Abstract: | This paper analyzes determinants for regional differences in German unemployment rates. We specify a spatial panel model to avoid biased and inefficient estimates due to spatial dependence. Additionally, we control for temporal dynamics in the data. Our study covers the whole of Germany as well as East andWest Germany separately. We exploit district-level data on 24 possible explanatory variables for the period from 1999 until 2007. Our results suggest that the spatial dynamic panel model is the best model for this analysis. Furthermore, we find that German regional unemployment is of disequilibrium nature, which justifies political interventions. |
| Keywords: | regional unemployment, spatial dependence, spatial panel models, Germany |
| JEL: | C23 R12 R23 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2012-026&r=lab |
| By: | David Amirault; Paul Fenton; Thérèse Laflèche |
| Abstract: | The Bank of Canada conducted a Wage Setting Survey with a sample of 200 private sector firms from mid-October 2007 to May 2008. Results indicate that wage adjustments for the Canadian non-union private workforce are overwhelmingly time dependent, with a fixed duration of one year, and are clustered in the first four months of the year, suggesting that wage stickiness may not be constant over the year. Ad hoc adjustments between these fixed dates are rare, but when they do occur they are almost always upward and often in response to tight labour markets. The market wage rate is the most important factor managers consider when setting wages for their employees. Depending on firm size, different strategies are used to gain information about the market wage. Other important factors taken into account when setting wages include the firm’s profitability, its difficulty in attracting staff and workers’ productivity. While many managers acknowledge a link between the wage decision and inflation, very few use formal wage indexation rules such as a cost-of-living adjustment. Rather, most describe an informal backward-looking link. Survey results also suggest that managers are very reluctant to cut nominal base wages in times of weak demand. Managers are more likely to cut incentive pay, which would allow some flexibility in total compensation even if base pay is inflexible, or reduce the quantity of labour inputs (hours and employees). |
| Keywords: | Labour markets; Transmission of monetary policy |
| JEL: | E24 J33 M52 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocadp:13-1&r=lab |
| By: | Chinhui Juhn (University of Houston); Gergely Ujhelyi (University of Houston); Carolina Villegas-Sanchez (ESADE Universitat Ramon Llul) |
| Abstract: | This paper studies the effect of trade liberalization on an under-explored aspect of wage inequality - gender inequality. We consider a model where firms differ in their productivity and workers are differentiated by skill as well as gender. A reduction in tariffs induces more productive firms to modernize their technology and enter the export market. New technologies involve computerized production processes and lower the need for physically demanding skills. As a result, the relative wage and employment of women improves in blue-collar tasks, but not in white-collar tasks. We test our model using a panel of establishment level data from Mexico exploiting tariff reductions associated with the North American Free Trade Agreement (NAFTA). Consistent with our theory we find that tariff reductions caused new firms to enter the export market, update their technology and replace male blue-collar workers with female blue-collar workers. |
| Keywords: | trade, gender, inequality |
| JEL: | D3 F15 J16 |
| Date: | 2013–01–22 |
| URL: | http://d.repec.org/n?u=RePEc:hou:wpaper:201303234&r=lab |
| By: | LUISITO BERTINELLI (University of Luxembourg CREA); OLIVIER CARDI (University Panthéon-Assas ERMES and Ecole Polytechnique); PARTHA SEN (Department of Economics, Delhi School of Economics, Delhi, India) |
| Abstract: | In a dynamic general equilibrium model with endogenous markups and labor market frictions, we investigate the e®ects of increased product market competition. Unlike most macroeconomic models of search, we endogenize the labor supply along the extensive mar- gin. We ¯nd numerically that a model with endogenous labor force participation decision produces a decline in the unemployment rate which is almost three times larger than that in a model with ¯xed labor force. For a calibration capturing alternatively European and the U.S. labor markets, a deregulation episode, which lowers the markup by 3 percent- age points, results in a fall in the unemployment rate by 0.17 and 0.07 percentage point, respectively, while the labor share is almost una®ected in the long-run. The sensitivity analysis reveals that product market deregulation is more e®ective in countries where labor market regulation is high, product markets are initially highly regulated, unemployment bene¯ts are smaller and labor force is more responsive. |
| Keywords: | Imperfect competition; Endogenous markup; Search theory; Unemployment; Deregulation. |
| JEL: | E24 J63 L16 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:cde:cdewps:221&r=lab |