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on Labour Economics |
| By: | Lundberg, Shelly (University of California, Santa Barbara) |
| Abstract: | Research and policy discussion about the diverging fortunes of children from advantaged and disadvantaged households have focused on the skill disparities between these children – how they might arise and how they might be remediated. Analysis of data from the National Longitudinal Study of Adolescent Health reveals another important mechanism in the determinants of educational attainment – differential returns to skills for children in different circumstances. Though the returns to cognitive ability are generally consistent across family background groups, personality traits have very different effects on educational attainment for young men and women with access to different levels of parental resources. These results are consistent with a model in which the provision of focused effort in school is complementary with parental inputs while openness, associated with imagination and exploration, is a substitute for information provision by educated parents and thus contributes to resilience in low-resource environments. In designing interventions to improve outcomes for disadvantaged children, we need to be cognizant of interactions between a child's skills and their circumstances. |
| Keywords: | education, inequality, noncognitive skills |
| JEL: | I24 J24 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7595&r=lab |
| By: | Francisco J. Buera; Joseph P. Kaboski; Min Qiang Zhao |
| Abstract: | This paper quantifies the roles of increases in the demand for skill-intensive output, the efficient scale of service production, and female labor supply in the growth of services. We extend the Buera and Kaboski (2012a,b) model to a two-person household, incorporating a joint decision on home and market production, and allow for skill and sectoral biased technology progress. The rising scale of services, the rising demand for skill-intensive output, and skill-biased technical change all play dominant roles. Furthermore, the extended model explains the majority of the increase in female labor supply, which also plays a role in services growth. |
| JEL: | J11 J22 O14 O33 O4 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19372&r=lab |
| By: | Pashchenko, Svetlana; Porapakkarm, Ponpoje |
| Abstract: | Having low income is one of the requirements for Medicaid eligibility. Given that earning ability is unobservable, once an individual with high labor income stops working it is impossible to distinguish him from those whose potential labor income is low. This can affect the ability of Medicaid to target the most disadvantaged people given that a large fraction of its beneficiaries do not work. In this paper we ask two questions: 1) Does Medicaid significantly distort work incentives? 2) Can the insurance-incentives trade-off of Medicaid be improved without changing the size of the redistribution in the economy? Our tool is a general equilibrium model with heterogeneous agents calibrated using the Medical Expenditure Panel Survey Dataset to match the life-cycle patterns of employment and insurance take-up behavior as well as the key aggregate statistics. We find that around 20% of Medicaid enrollees do not work in order to be eligible. These distortions are costly for the economy: if Medicaid eligibility could be linked to (unobservable) productivity the resulting ex-ante welfare gains are equivalent to 1.5% of the annual consumption. We show that asset testing can achieve a similar outcome but only if asset limits are allowed to be different for workers and non-workers. |
| Keywords: | health insurance, Medicaid, labor supply, asset testing, general equilibrium, life-cycle models |
| JEL: | D52 D91 E21 H53 I13 I18 |
| Date: | 2013–09–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:49730&r=lab |
| By: | Russell Cooper; Guan Gong; Ping Yan |
| Abstract: | This paper studies the employment and productivity implications of new labor regulations in China. These new policies were intended to protect workers' employment conditions by, among other things, increasing firing costs and increasing compensation. We estimate a model of costly labor adjustment from data prior to the policy. We use the estimated model to simulate the effects of the policy. We find that increases in severance payments lead to sizable job creation, a significant reduction in labor reallocation and an increase in the exit rate. A policy of credit market liberalization will reduce employment, increase labor reallocation and increase wages. The estimated elasticity of labor demand implies that an increase in the base wage leads to sizable job losses. |
| JEL: | E24 J08 J2 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19324&r=lab |
| By: | Hijzen, Alexander (OECD); Mondauto, Leopoldo (IMT Lucca); Scarpetta, Stefano (OECD) |
| Abstract: | This paper analyses the impact of employment protection (EP) on the composition of the workforce and worker turnover using a unique firm-level dataset for Italy. The impact of employment protection is analyzed by means of a regression discontinuity design (RDD) that exploits the variation in EP provisions across firms below and above a size threshold. Using our RDD approach, we show that EP increases worker reallocation, suggesting that EP tends to reduce rather to increase worker security on average. We further show that this can be entirely explained by the fact that firms facing more stringent EP make a greater use of workers on temporary contracts. Our preferred estimates suggest that the discontinuity in EP increases the incidence of temporary work by 2-2.5 percentage points around the threshold. Moreover, further analysis suggests that the effect of employment protection persists among larger firms well beyond the threshold and may account for about 20% of the overall incidence of temporary work. There is also evidence that EP reduces labour productivity and this effect is to an important extent due to the impact of EP on worker reallocation and the incidence of temporary work. |
| Keywords: | employment protection legislation, worker reallocation, temporary contracts, labour market duality |
| JEL: | J42 J63 J65 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7594&r=lab |
| By: | Ricky Kanabar; Peter Simmons |
| Abstract: | The UK state pension (which depends only on age) includes an option to defer take up which yields either a subsequent lump sum or higher weekly pension. We analyse the joint decisions on pension deferral and intertemporal labour supply/participation in a life cycle setting. We show that deferral is purely a financial decision, but the impact of deferral on work decisions depends on preferences, wage rates, non-labour income and initial wealth. To exactly characterise this we use a quasilinear utility function, and provide calibrated simulations. We also discuss the choice between a lump sum or increased weekly pension |
| Keywords: | Retirement, Labour Supply, Ageing, UK State Pension |
| JEL: | J14 J18 J22 J26 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:13/26&r=lab |
| By: | Serkan Degirmenci; Ipek Ilkkaracan |
| Abstract: | Turkish economic growth has been characterized by periodic crises since financial liberalization reforms were enacted in the early 1990s. Given the phenomenally low female labor force participation rate in Turkey (one of the lowest in the world) and the limited scope of the country's unemployment insurance scheme, there appears to be ample room for a female added worker effect as a household strategy against unemployment shocks under economic crises. Using micro data from household labor force surveys for the 2004-10 period, we examine the extent to which an unemployment shock to the primary male earner instigates female members of the household to move from nonparticipant status to labor market participation. This paper differs from the earlier few studies on the added worker effect in Turkey in a number of aspects. First, rather than simply basing the analysis on a static association between women's observed participation status and men's observed unemployment status in the survey period, we explore whether there is a dynamic relationship between transitions of women and men across labor market states. To do this, we make use of a question introduced to the Household Labor Force Survey in 2004 regarding the survey respondent's labor market status in the previous year. This allows us to explore transitions by female members of households from nonparticipant status in the previous year to participant status in the current year, in response to male members making a transition from employed in the previous period to unemployed in the current period. We explore whether and to what extent the primary male earner's move from employed to unemployed status determines the probability of married or single female full-time homemakers entering the labor market. We estimate the marginal effect of the unemployment shock on labor market transition probability for the overall sample as well as for different groups of women, and hence demonstrate that the effect varies widely depending on the particular characteristics of the woman--for example, her education level, age, urban/rural residence, and marital and parental status. We find that at the micro level an unemployment shock to the household increases the probability of a female homemaker entering the labor market by 6-8 percent. The marginal effects vary substantially across different groups of women by age, rural or urban residence, and education. For instance, a household unemployment shock increases by up to 34 percent the probability that a university graduate homemaker in the 20-45 age group will enter the labor market; for a high school graduate the probability drops to 17 percent, while for her counterpart with a secondary education the marginal effect is only 7 percent. Our estimate of the total (weighted) number of female added workers in the crisis years shows that only around 9 percent of the homemakers in households experiencing an unemployment shock enter the labor market. Hence we conclude that, while some households experiencing unemployment shocks do use the added worker effect as a coping strategy, this corresponds to a relatively small share. We attribute this finding to the deeply embedded structural constraints against female labor market participation in Turkey. |
| Keywords: | Labor Supply; Economic Crisis: Turkey |
| JEL: | J16 J21 J22 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_774&r=lab |
| By: | Kumler, Todd J. (Columbia University); Verhoogen, Eric (Columbia University); Frias, Judith A. (Mexican Institute of Social Security (IMSS)) |
| Abstract: | Non-compliance of firms with tax regulations is a major constraint on state capacity in developing countries. We focus on an arguably under-appreciated dimension of non-compliance: under-reporting of wages by formal firms to evade payroll taxes. We develop a simple partial-equilibrium model of endogenous compliance by heterogeneous firms to guide the empirical investigation. We then compare two independent sources of individual-level wage information from Mexico – firms' wage reports to the Mexican social security agency and workers' responses to a household labor-force survey – to investigate the extent of wage under-reporting and how it responded to an important change in the social security system. We document that under-reporting by formal firms is extensive, and that compliance is better in larger firms. Using a difference-in-differences strategy based on the 1997 Mexican pension reform, which effectively tied pension benefits more closely to reported wages for younger workers than for older workers, we show that the reform led to a relative decline in under-reporting for younger workers. Within metro area/sector/firm size cells, the decline in under-reporting was greater in cells initially employing a younger workforce on average. The empirical patterns are consistent with our theoretical model and suggest that giving employees incentives and information to improve the accuracy of employer reports can be an effective way to improve payroll-tax compliance. |
| Keywords: | tax compliance, state capacity, Mexico, heterogeneous firms, pension reform |
| JEL: | O17 H26 H55 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7591&r=lab |
| By: | Anosova, Daria; Sonin, Konstantin; Vanags, Alf; Zasova, Anna |
| Abstract: | In terms of output decline and increase in unemployment, the economic recession in Latvia that started during the 2008-09 financial crisis was one of the most severe in the world. Using both decomposition of the unemployment rate into structural and cyclical components and Mortensen and Pissarides’ search and matching approach, we demonstrate that the changes in unemployment should be attributed primarily to cyclical, rather than structural factors; as of 2013, a large share of Latvian unemployment is still cyclical. Our results provide important implications for anti-crisis policy in Latvia and elsewhere in the world: the surge in unemployment was largely a consequence of Latvia’s austerity policy. |
| Keywords: | Beveridge curve; cyclical unemployment; labour market matching; structural unemployment |
| JEL: | E24 J60 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9525&r=lab |
| By: | David J. Deming; Sarah Cohodes; Jennifer Jennings; Christopher Jencks |
| Abstract: | We study the impact of accountability pressure in Texas public high schools in the 1990s on postsecondary attainment and earnings, using administrative data from the Texas Schools Project (TSP). We find that high schools respond to the risk of being rated Low-Performing by increasing student achievement on high-stakes exams. Years later, these students are more likely to have attended college and completed a four-year degree, and they have higher earnings at age 25. However, we find no overall impact - and large declines in attainment and earnings for low-scoring students - of pressure to achieve a higher accountability rating. |
| JEL: | I20 I24 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19444&r=lab |
| By: | Nathan Fiala |
| Abstract: | Classic economic theory predicts that markets will clear, leaving little or no gains from trade left on the table. Laboratory experiments have largely confirmed this, though the results of recent field experiments have been mixed, with some artefactual markets in developing countries performing relatively inefficiently. I create a realistic multi-round trading market in Uganda with market-experienced individuals to explore the efficiency of trading and test what individual traits predict market efficiency and bargaining success using a rich dataset on individual characteristics. In early rounds, market efficiency is low. By the final round, efficiency rates are closer to theory. I find that individual characteristics of the buyers and sellers strongly predict the level of efficiency within the individual rounds. Individual characteristics are also important for individual success and divide along bargaining power: for buyers, who by design have high market power, wealth and patience are positively and significantly correlated with rents; for sellers with low market power, education, anti-social behavior and aggression are positively and significantly associated with rents. The results of the bargaining game also correlate with wealth levels two years after the experiment, suggesting that market prowess predicts lifetime outcomes. The results add importance to the role of individual characteristics for individual and social efficiency outcomes. |
| Keywords: | Market interaction, market efficiency, developing markets, individual characteristics |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1326&r=lab |
| By: | Alesina, Alberto F; Giuliano, Paola |
| Abstract: | We study the role of the most primitive institution in society: the family. Its organization and relationship between generations shape values formation, economic outcomes and influences national institutions. We use a measure of family ties, constructed from the World Values Survey, to review and extend the literature on the effect of family ties on economic behavior and economic attitudes. We show that strong family ties are negatively correlated with generalized trust; they imply more household production and less participation in the labor market of women, young adult and elderly. They are correlated with lower interest and participation in political activities and prefer labor market regulation and welfare systems based upon the family rather than the market or the government. Strong family ties may interfere with activities leading to faster growth, but they may provide relief from stress, support to family members and increased wellbeing. We argue that the value regarding the strength of family relationships are very persistent over time, more so than institutions like labor market regulation or welfare systems. |
| Keywords: | cultural economics; family values; growth; institutions; labor market regulations |
| JEL: | J2 J6 O4 O5 Z1 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9483&r=lab |