|
on Labour Economics |
|
Issue of 2013‒06‒30
twenty-two papers chosen by Erik Jonasson National Institute of Economic Research |
| By: | OECD |
| Abstract: | How to stimulate growth and support job creation are two critical challenges that countries and localities confront and limited resources require lateral thinking about how actions in one area, such as employment and training, can have simultaneous benefits in others, such as creating new jobs and better supporting labour market inclusion. The OECD Local Economic and Employment Development (LEED) Programme has developed an international cross-comparative study, which examines the contribution of local labour market policy to boosting quality employment. Each country review examines the capacity of employment services and training providers to contribute to a long-term strategy which strengthens the resiliency of the local economy, increases skills levels and job quality. In the United States, the study has looked at the range of institutions and bodies involved in workforce and skills development in two states – California and Michigan. In-depth fieldwork focused on two local Workforce Investment Boards in each state: the Sacramento Employment and Training Agency (SETA); the Northern Rural and Training and Employment Consortium (NoRTEC); the Southeast Michigan Community Alliance (SEMCA); and the Great Lakes Bay Michigan Works. The working paper concludes with a number of recommendations and actions to promote job creation at the federal/state and local levels. |
| Date: | 2013–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:oec:cfeaaa:2013/10-en&r=lab |
| By: | Judith K. Hellerstein (University of Maryland & NBER); Mark J. Kutzbach (U.S. Bureau of the Census); David Neumark (UCI, NBER & IZA) |
| 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. |
| Keywords: | Networks, job matches, wages, turnover |
| JEL: | J15 J30 J63 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2013/6/doc2013-20&r=lab |
| By: | Depew, Briggs (Louisiana State University); Norlander, Peter (University of California, Los Angeles); Sorensen, Todd A (University of California, Riverside) |
| Abstract: | Critics of the H-1B program for high-skilled workers argue that the program restricts immigrant job mobility and lacks a vehicle for adjusting the number of visas during a recession. We study the job mobility of highly-skilled Indian IT guest workers and provide new evidence on their inter-firm mobility and return migration patterns. We use a unique multi-year firm level dataset to show that, outside of the Great Recession, these workers are mobile and that lower paid guest workers are more likely than higher paid guest workers to separate to another firm in the U.S. We also analyze return migration decisions and find that low wage workers repatriate more than high wage workers, and that this relationship intensified during the Great Recession. This partially mitigates concerns that guest worker visa programs do not adjust to fluctuations in the macro economy. Following this finding, we show that the employment to population ratio (EPOP) for highly-skilled male workers has fallen at a much steeper rate since 2008 than is typically recognized, once we account for the phenomenon of discouraged immigrants. |
| Keywords: | skilled migration, labor market frictions, business cycles |
| JEL: | F22 J42 E32 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7456&r=lab |
| By: | Boeri, Tito (Bocconi University); Garibaldi, Pietro (University of Turin); Moen, Espen R. (Norwegian Business School (BI)) |
| Abstract: | All OECD countries have either legally mandated severance pay or compensations imposed by industry-level bargaining in case of employer initiated job separations. According to the extensive literature on Employment Protection Legislation such transfers are either ineffective or highly distortionary. In this paper we show that mandatory severance is optimal in presence of wage deferrals when there is moral hazard of employers and workers, notably when employers cannot commit not to fire a non-shirker and shirkers can also get away with it. Our model also accounts for two neglected features of EPL. The first is that dismissal costs depend not only on whether the dismissal is deemed fair or unfair, but also on the nature, economic vs. disciplinary, of the layoff. The second feature is that compensation for unfair dismissal or severance is generally increasing with tenure. |
| Keywords: | severance, unfair dismissal, graded security |
| JEL: | J63 J65 J33 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7455&r=lab |
| By: | Cahuc, Pierre (Ecole Polytechnique, Paris); Carcillo, Stéphane (OECD); Zimmermann, Klaus F. (IZA and University of Bonn) |
| Abstract: | Youth unemployment is notoriously high in France, in particular for the low-skilled. Within the EU, only the crisis countries of Southern Europe fare worse. This report delivered to the French Council of Economic Analysis analyzes the causes and consequences of this alarming trend. In addition, drawing on the available evidence on various measures that could improve the current situation, concrete policies proposals are derived that cover the areas of vocational education, second chance programs, job search assistance, income support, employment subsidies and dismissal protection. |
| Keywords: | labor policy, youth unemployment, minimum wage, vocational education, employment protection, France |
| JEL: | J24 J38 J68 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp64&r=lab |
| By: | DE GRIP Andries; DUPUY Arnaud; JOLLES Jelle; VAN BOXTEL Martin |
| Abstract: | This paper uses longitudinal test data to analyze the relation between retirement and cognitive development. Controlling for individual fixed effects and lagged cognition, we find that retirees face greater declines in information processing speed than those who remain employed. However, remarkably, their cognitive flexibility declines less, an effect that appears to be persistent 6 years after retirement. Both effects of retirement on cognitive development are comparable to the effect of a five to six-year age difference. Controlling for changes in blood pressure, which are negatively related to cognitive flexibility, we still find lower declines in cognitive flexibility for retirees. Since the decline in information processing speed after retirement holds particularly for the low educated, activating these persons after retirement could lower the social costs of an aging society. |
| Keywords: | Cognitive decline; Labor market activity; Retirement |
| JEL: | J24 J26 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2013-11&r=lab |
| By: | Pastore, Francesco (University of Naples II); Sattar, Sarosh (World Bank); Tiongson, Erwin R. (World Bank) |
| Abstract: | Very little is known about gender wage disparities in Kosovo and, to date, nothing is known about how such wage disparities evolve over time, particularly during the first few years spent by young workers in the labor market. More generally, not much is known about gender wage gaps in early career worldwide, a period which is perceived to be an important determinant of the overall gender wage disparity. This paper analyzes data from the School-to-Work Transition (SWT) survey, an unusual survey conducted by the ILO between 2004 and 2006 in eight countries, including Kosovo, that documents the labor market experiences of the youngest age segment in the labor force (age 15–25 years). The results of the analysis suggest that, on average, women have lower education attainment than men but this educational disparity is masked among the sample of employed men and women who tend to be well-educated. The consequences of this dramatic segmentation of labor market participation are striking. On average, there is little or no gender wage gap. The results of the Juhn et al. (1993) decomposition analysis reveals that gender wage differences are almost entirely driven by differences in characteristics (rather than either the returns to those characteristics or the residual). The greater average educational attainment of employed women, among other characteristics, tends to fully offset the gender wage gap. Not surprisingly, the returns to women's education among employed women are low because there is little variation in educational attainment among the sample of well-educated employed women. When the analysis controls for sample selection bias and heterogeneity, the returns to women's education rise, confirming the lower productivity-related characteristics of non-employed women compared to employed women. The relatively small sample constrains a fuller analysis of the emergence of the gender wage gap, which, according to a small but growing international literature, typically materializes during childbearing years. |
| Keywords: | gender wage gap and dynamics, early labor market outcomes, school-to-work transitions, earnings equations, decomposition analysis, Balkans area, Kosovo |
| JEL: | I21 J13 J15 J16 J24 J31 J7 P30 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7461&r=lab |
| By: | Mavromaras, Kostas G. (NILS, Flinders University); Sloane, Peter J. (Swansea University); Wei, Zhang (NILS, Flinders University) |
| Abstract: | There is a substantial literature on the scarring effects of unemployment on future employment prospects and a smaller one on the scarring effects of low pay, but the possibility that skills mismatch in the form of skills under-utilisation, may also have similar detrimental effects, has not previously been considered. This paper uses the first ten waves of the HILDA survey data to investigate the inter-related dynamics of unemployment, low pay and skills under-utilisation in Australia, focussing on differences by gender and educational pathways. It shows that skills under-utilisation also exhibits scarring effects, in addition to earlier evidence on wage penalties and reduced job satisfaction. |
| Keywords: | education pathways, state dependence, dynamic estimation, job quality |
| JEL: | J24 J31 I21 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7440&r=lab |
| By: | Burger, Rulof (Stellenbosch University); van der Berg, Servaas (Stellenbosch University); Von Fintel, Dieter (Stellenbosch University) |
| Abstract: | In the late 1990s the South African Department of Education implemented two policies that were meant to reduce the large number of over-age learners in the school system: schools were no longer allowed to accept students who were more than two years older than the correct grade-age and students could not be held back more than once in each of four schooling phases. Our analysis uses school administrative data and household survey data to show that these policies coincided with a decrease in school enrolment of at least 400,000 and possibly more than 900,000 learners. These policies appear to have pushed many students into the labour market at earlier ages than was observed for previous generations, which explains much of the sudden increase in labour force participation and unemployment during this period. However, since these individuals would probably have entered the labour market sooner if not for their poor employment prospects, we argue that the resulting increase in unemployment signifies a more accurate reflection of disguised unemployment that already existed in the mid-1990s rather than a deterioration of labour market conditions. |
| Keywords: | South Africa, education, unemployment, participation |
| JEL: | J21 I25 J64 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7450&r=lab |
| By: | Gobillon, Laurent (INED, France); Rupert, Peter (University of California, Santa Barbara); Wasmer, Etienne (Sciences Po, Paris) |
| Abstract: | The unemployment rate in France is roughly 6 percentage points higher for African immigrants than for natives. In the US the unemployment rate is approximately 9 percentage points higher for blacks than for whites. Commute time data indicates that minorities face longer commute times to work, potentially reflecting more difficult access to jobs. In this paper we investigate the impact of spatial mismatch on the unemployment rate of ethnic groups using the matching model proposed by Rupert and Wasmer (2012). We find that spatial factors explain between 1 to 1.5 percentage points of the unemployment rate gap in both France and the US, amounting to 17% to 25% of the relative gap in France and about 10% in the US. Among these factors, differences in commuting distance plays the most important role. In France, though, longer commuting distances may be mitigated by higher mobility in the housing market for African workers. Overall, we still conclude that labor market factors remain the main explanation for the higher unemployment rate of Africans. |
| Keywords: | spatial mismatch hypotheses, commuting, job acceptance, ethnic unemployment rates |
| JEL: | J15 J61 R23 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7448&r=lab |
| By: | Richard Duhautois (CEE - Centre d'études de l'emploi - Ministère de l'Enseignement supérieur et Recherche - Ministère du Travail, de l'Emploi et de la Santé, ERUDITE - Equipe de Recherche sur l'Utilisation des Données Individuelles Temporelles en Economie - Université Paris-Est Créteil Val-de-Marne (UPEC) : EA437 - Université Paris-Est Marne-la-Vallée (UPEMLV)); Fabrice Gilles (CEE - Centre d'études de l'emploi - Ministère de l'Enseignement supérieur et Recherche - Ministère du Travail, de l'Emploi et de la Santé, EQUIPPE - ECONOMIE QUANTITATIVE, INTEGRATION, POLITIQUES PUBLIQUES ET ECONOMETRIE - Université Lille I - Sciences et technologies); Héloïse Petit (CEE - Centre d'études de l'emploi - Ministère de l'Enseignement supérieur et Recherche - Ministère du Travail, de l'Emploi et de la Santé, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne) |
| Abstract: | We address the relation between establishment wage differentials and worker flows, i.e., the churning rate and the quit rate. Our analysis is based on a linked employer-employee dataset covering the French private sector from 2002 to 2005. Our estimations support the hypothesis that wage premium is an efficient human resource management tool to stabilize workers: churning rates are lower in high-paying firms due to lower quit rates. We further show that the relation is not linear, and it differs among skill groups and according to establishment size: it is strongest for low-wage levels, for low-skilled workers and in large establishments. |
| Keywords: | establishment wage effects; worker flows; spline regression; linked employer-employee data |
| Date: | 2012–11–15 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-00833872&r=lab |
| By: | Caliendo, Marco (University of Potsdam); Künn, Steffen (IZA) |
| Abstract: | Recent microeconometric evaluation studies have shown that start-up subsidies for unemployed individuals are an effective policy tool to improve long-term employment and income prospects of participants, in particular compared to other active labor market programs (e.g. training, job search assistance or job creation schemes). What has not been examined yet are the potentially heterogeneous effects of start-up programs across regional labor markets. Labor demand side restrictions in areas with relatively bad labor market conditions generally increase entries into start-up programs as job offers are limited and starting an own business is an opportunity to leave unemployment. However, the survival of firms in deprived areas is also lower, such that the overall effect remains an empirical question. We use a combination of administrative and survey data and observe participants in two distinct start-up programs in Germany for five years after start-up as well as a control group of unemployed who did not enter these programs. We add information on unemployment rates and GDP per capita at the labor agency district level to distinguish regional labor markets. Using propensity score matching methods we find supportive evidence that the founding process and development of businesses as well as program effectiveness is influenced by prevailing economic conditions at start-up. |
| Keywords: | start-up subsidies, evaluation, effect heterogeneity, regional effects, self-employment |
| JEL: | J68 R11 C14 H43 L26 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7460&r=lab |
| By: | Helene Jorgensen |
| Abstract: | It is widely believed that volunteering will improve workers’ job prospects. The logic is that volunteering offers opportunities to expand work-related experience, develop new skills, and build a network of professional contacts. For young people with little history of paid employment it can also signal that a person would be a reliable and motivated employee. In spite of these widespread views about volunteering, surprisingly little research has been done on the effect of volunteering on employment and pay in the United States. This analysis examines volunteering as a pathway to employment during a period of high unemployment, when it is reasonable to expect the beneficial effects of volunteering to be especially pronounced. |
| Keywords: | volunteering, jobs, employment, unemployment, economy, volunteer, job prospects |
| JEL: | J J6 J2 J64 J2 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2013-10&r=lab |
| By: | Edoardo Di Porto (MEMOTEF, Department "Sapienza" University of Rome and EQUIPPE USTL/Lille); Leandro Elia (Institute for the Protection and Security of the Citizen European Commission-Joint Research Centre); Cristina Tealdi (IMT Lucca Institute for Advanced Studies) |
| Abstract: | We analyze how different policy interventions may incentive the transition of workers from the informal to the formal sector. We use Italian data over the period 1998-2008 to evaluate ex post whether the 2003 Italian labor market reform was able to reach the objective to reduce the share of shadow employment. Based on our empirical results, we develop an ex ante evaluation based on a search and matching model, á la Mortensen and Pissarides to determine the right combination of policy interventions which may be effective in generating a significant reduction in undeclared work together with an expansion of the formal sector. We find that in an economy where permanent and temporary contracts coexist, the combination of lower payroll taxes for permanent jobs and higher probability of being audited generates a compression of the informal sector, leaving unemployment unchanged. A similar result can be obtained through a reduction of the firing cost associated with permanent jobs, even though this causes temporary contracts to increase relatively more than permanent contracts. |
| Keywords: | Labor tax evasion, temporary contracts, firing costs, search frictions, policy evaluation |
| JEL: | J38 J63 J64 H26 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:ial:wpaper:2/2013&r=lab |
| By: | John T. Addison (Department of Economics, Moore School of Business, University of South Carolina, and GEMF / University of Coimbra, Portugal); Orgul D.Ozturk (Department of Economics, Moore School of Business, University of South Carolina); Si Wang (Department of Economics, Moore School of Business, University of South Carolina) |
| Abstract: | Data from the National Longitudinal Survey of Youth 1979 indicate that between 1996 and 2010 females on average lost some of the promotion momentum they had achieved at the beginning of mid-career, although they outperformed males in this regard. For both genders economic downturn has contributed to reduced promotion probabilities. In the case of women, however, cohort effects rather than the cycle seem to explain the promotion experience during the Great Recession. Promotions translate into higher real wage increases, and typically more so where job responsibilities increase. Crowding effects, if not necessarily a thing of the past, are no longer manifested in reduced female promotion rates or earnings. |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:gmf:wpaper:2013-16.&r=lab |
| By: | Konstantinos Angelopoulos; James Malley; Apostolis Philippopoulos |
| Abstract: | This paper considers the role of human capital accumulation of agents differentiated by skill type in the joint determination of social mobility and the skill premium. Our approach allows us to evaluate the dynamic e¤ects of tax reforms and education spending policies on economic e¢ ciency as well as on social and wage inequality. The analysis contributes to the literature by showing that endogenous so- cial mobility, human capital for skilled and unskilled labour, and exter- nalities from skilled human capital on social mobility are key channels through which tax-spending policy is transmitted. |
| Keywords: | social mobility, skill premium, tax and education policy |
| JEL: | E62 J31 J62 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:gla:glaewp:2013_10&r=lab |
| By: | John Carter Braxton |
| Abstract: | Initial jobless claims provide a weekly snapshot of the labor market. While known for being volatile, when put into the appropriate context initial claims can provide valuable information on the upcoming employment report. This paper introduces a new labor market indicator, referred to as the threshold of initial jobless claims, that serves as a benchmark of comparison for the weekly reporting of initial jobless claims. The threshold incorporates multiple margins of the labor market such as hires, quits, layoffs, and labor force participation. Deviations of observed initial claims from the threshold are shown to provide accurate estimates of the upcoming change in the unemployment rate. Labor market followers can then make weekly comparisons of observed initial claims to the threshold to gain an updated understanding on the current state of the labor market. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedkrw:rwp13-03&r=lab |
| By: | Wesselbaum, Dennis |
| Abstract: | This paper estimates a stylized search and matching model on data for Australia covering the period 1978-2008. Using Bayesian methods we find that the model does a fairly good job in replicating the data. Surprisingly, we find a large value for the worker’s bargaining power and low vacancy posting costs. The model generates a strong Beveridge curve and matches the standard deviations of all variables but vacancies. We identify technology and separation shocks to be the main driver of fluctuations. |
| Keywords: | Bayesian Methods, Business Cycle Fluctuations, Search and Matching, Unemployment. |
| JEL: | C11 E24 E32 J6 J60 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47771&r=lab |
| By: | Tominey, Emma (University of York) |
| Abstract: | Female labor supply can insure households against shocks to paternal employment. The paper estimates whether the female labor supply response to a paternal employment shock differs by eligibility to maternity employment protection. We exploit time-state variation in the implementation of unpaid maternity leave through the Family and Medical Leave Act (FMLA) in the US which increased employment protection from 0 to 12 weeks. We find that mothers eligible for FMLA speed up their return to work in response to a paternal shock, with a conditional probability of being in work 53% higher than in households with no paternal shock. In contrast, there was a negligible insurance response for mothers with no employment protection. |
| Keywords: | female labor supply, insurance, maternity leave |
| JEL: | I30 J13 J20 J64 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7462&r=lab |
| By: | Kawaguchi, Daiji (Hitotsubashi University); Murao, Tetsushi (Kyushu University); Kambayashi, Ryo (Hitotsubashi University) |
| Abstract: | This paper examines the effects of upgrading product quality standards on product and professional labor-market equilibriums when both markets are regulated. The Japanese government revised the Building Standards Act in June 2007, requiring a stricter review process for admitting the plans of large-scale buildings. This regulatory change increased the wage of certified architects in Tokyo by 30% but did not increase their total hours worked because of an inelastic labor supply. The stricter quality standards created a quasi-rent for certified architects and owners of condominiums at a cost to consumers. Evidence suggests that the stricter quality standards increased the transaction price of used condominiums by 15% in the Tokyo metropolitan area. |
| Keywords: | labor market of professionals, product standard, safety regulation, incidence of government regulation |
| JEL: | J44 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7443&r=lab |
| By: | Warda, Peter (Jönköping International Business School (JIBS), Center of Excellence for Science and Innovation Studies (CESIS) KTH, Sweden) |
| Abstract: | Structural changes due to global integration certainly affect the employment, productivity and profitability of firms. An interesting case reflects how firms use imports to replace certain stages in production of physical goods. The relevant question here is: if imports make up a substantial part of firms’ sales value, then can the import quality affect firms’ labor composition? The purpose of this paper is to analyze how high and low quality imports affect the labor composition in importing firms in Swedish manufacturing. Inter-firm variation shows that an increase in high (low) quality imports, on average, decreases the share of high-educated (low-educated) labor wages in total wages. Hence, a substitution effect. However, when intra-firm variation is considered the results are instead in favor of a complementary effect. |
| Keywords: | Labor decomposition; labor composition; imports; quality of imports; manufacturing |
| JEL: | F14 J21 J23 O33 |
| Date: | 2013–06–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0322&r=lab |
| By: | Molander, Anders (Oslo and Akershus University College of applied Sciences); Torsvik, Gaute (Department of Economics, University of Bergen) |
| Abstract: | So-called activation policies aiming at bringing jobless people into work have been a central component of welfare reforms across OECD countries during the last decades. Such policies combine restrictive and enabling programs, but their characteristic feature is that also enabling programs are mandatory, and non-compliers are sanctioned. There are four main arguments that can be used to defend mandatory activation of benefit recipients. We label them efficiency, sustainability, paternalism, and justice. Each argument is analyzed in turn and according to a strict scheme. First we clarify which standards it invokes. Thereafter we evaluate each argument according to its own standards Finally we introduce competing normative concerns that have to be taken into account. In the conclusion we discuss possible constellations of arguments that make up the normative space for activation policies. |
| Keywords: | work-welfare; social transfers; labour productivity; screening |
| JEL: | I38 J24 |
| Date: | 2013–06–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bergec:2013_003&r=lab |