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on Labour Economics |
| By: | Kahn, Lawrence M. (Cornell University) |
| Abstract: | Using longitudinal data on individuals from the European Community Household Panel (ECHP) for thirteen countries during 1995-2001, I investigate the wage premium for permanent jobs relative to temporary jobs. The countries are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal, Spain, and the United Kingdom. I find that among men the wage premium for a permanent vs. temporary job is lower for older workers and native born workers; for women, the permanent job wage premium is lower for older workers and those with longer job tenure. Moreover, there is some evidence that among immigrant men, the permanent job premium is especially high for those who migrated from outside the European Union. These findings all suggest that the gain to promotion into permanent jobs is indeed higher for those with less experience in the domestic labor market. In contrast to the effects for the young and immigrants, the permanent job pay premium is slightly smaller on average for women than for men, even though on average women have less experience in the labor market than men do. It is possible that women even in permanent jobs are in segregated labor markets. But as noted, among women, the permanent job wage premium is higher for the young and those with less current tenure, suggesting that even in the female labor market, employers pay attention to experience differences. |
| Keywords: | wage structure, segmented labor markets, temporary jobs |
| JEL: | J31 J42 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7623&r=lab |
| By: | Andersson, Fredrik (U.S. Department of the Treasury); Holzer, Harry J. (Georgetown University); Lane, Julia (American Institutes for Research); Rosenblum, David (Moody's Analytics); Smith, Jeffrey A. (University of Michigan) |
| Abstract: | We study the job training provided under the US Workforce Investment Act (WIA) to adults and dislocated workers in two states. Our substantive contributions center on impacts estimated non-experimentally using administrative data. These impacts compare WIA participants who do and do not receive training. In addition to the usual impacts on earnings and employment, we link our state data to the Longitudinal Employer Household Dynamics (LEHD) data at the U.S. Census Bureau, which allows us to estimate impacts on the characteristics of the firms at which participants find employment. We find moderate positive impacts on employment, earnings and desirable firm characteristics for adults, but not for dislocated workers. Our primary methodological contribution consists of assessing the value of the additional conditioning information provided by the LEHD relative to the data available in state Unemployment Insurance (UI) earnings records. We find that value to be zero. |
| Keywords: | job training, active labor market program, program evaluation, Workforce Investment Act, administrative data |
| JEL: | I38 J08 J24 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7621&r=lab |
| By: | Cornelissen, Thomas (University College London); Dustmann, Christian (University College London); Schönberg, Uta (University College London) |
| Abstract: | Existing evidence on peer effects in a work environment stems from either laboratory experiments or from real-word studies referring to a specific firm or specific occupation. Yet, it is unclear to what extent these findings apply to the labor market in general. In this paper, therefore, we investigate peer effects in the workplace for a representative set of workers, firms, and occupations with a focus on peer effects in wages rather than productivity. Our estimation strategy – which links the average permanent productivity of workers' peers to their wages – circumvents the reflection problem and accounts for the endogenous sorting of workers into peer groups and firms. On average, we find only small peer effects in wages. We also find small peer effects in the type of high skilled occupations which more closely resemble those used in studies on knowledge spillover. In the type of low skilled occupations analyzed in existing studies on social pressure, in contrast, we find larger peer effects, about half the size of those identified in similar studies on productivity. |
| Keywords: | knowledge spillover, social pressure, wage structure |
| JEL: | J24 J31 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7617&r=lab |
| By: | Brenzel, Hanna (Institute for Employment Research (IAB), Nuremberg); Gartner, Hermann (Institute for Employment Research (IAB), Nuremberg); Schnabel, Claus (University of Erlangen-Nuremberg) |
| Abstract: | Using a representative establishment dataset, this paper is the first to analyze the incidence of wage posting and wage bargaining in the matching process from the employer's side. We show that both modes of wage determination coexist in the German labor market, with about two-thirds of hirings being characterized by wage posting. Wage posting dominates in the public sector, in larger firms, in firms covered by collective agreements, and in part-time and fixed-term contracts. Job-seekers who are unemployed, out of the labor force or just finished their apprenticeship are also less likely to get a chance of negotiating. Wage bargaining is more likely for more-educated applicants and in jobs with special requirements as well as in tight regional labor markets. |
| Keywords: | wage posting, wage bargaining, hiring, matching, Germany |
| JEL: | E24 J30 J63 M51 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7624&r=lab |
| By: | Andrea Ichino; Guido Schwerdt; Rudolf Winter-Ebmer; Andrea Ichino |
| Abstract: | We study whether employment prospects of old and young workers differ after a plant closure. Using Austrian administrative data, we show that old and young workers face similar displacement costs in terms of employment in the long-run, but old workers lose considerably more initially and gain later. We interpret these findings using a search model with retirement as an absorbing state, that we calibrate to match the observed patterns. Our finding is that the dynamics of relative employment losses of old versus young workers after a displacement are mainly explained by different opportunities of transition into retirement. In contrast, differences in layoff rates and job offer arrival rates cannot explain these patterns. Our results support the idea that retirement incentives, more than weak labor demand, are responsible for the low employment rates of older workers. |
| Keywords: | Aging, Employability, Plant Closures, Matching |
| JEL: | J14 J65 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:jku:nrnwps:2013_09&r=lab |
| By: | Anabela Carneiro; Pedro Portugal; Jose Varejão |
| Abstract: | In this article we study the resilience of the Portuguese labor market, in terms of job flows, employment and wage developments, in the context of the current recession. We single out the huge contribution of job destruction, especially due to the closing of existing firms, to the dramatic decline of total employment and increase of the unemployment rate. We also document the very large increase in the incidence of minimum wage earners and nominal wage freezes. We explored three different channels that may have amplified the employment response to the great recession: the credit channel, the wage rigidity channel, and the labor market segmentation channel. We uncovered what we believe is convincing evidence that the severity of credit constraints played a significant role in the current job destruction process. Wage rigidity is seen to be associated with lower net job creation and higher failure rates of firms. Finally, labor market segmentation seemed to have favored a stronger job destruction that was facilitated by an increasing number of temporary workers Dans cet article, nous analysons la résilience du marché du travail portugais, en termes de mouvements de main d’oeuvre, d'emplois et d'évolution des salaires, dans le contexte de la récession actuelle. Nous mettons en évidence la contribution significative des destructions d'emplois, notamment en raison des fermetures d’entreprises, à la baisse importante de l'emploi total et à l'augmentation du taux de chômage. Nous examinons également le très fort accroissement du nombre de travailleurs rémunérés au salaire minimum et le gel des salaires nominaux. Nous explorons trois différentes causes pouvant avoir amplifié la réaction de l'emploi à la grande recession : l’accès au crédit, la rigidité des salaires, et la segmentation du marché du travail. Nous mettons en lumière une preuve, que nous jugeons convaincante, que la rigueur des contraintes de crédit pesant sur les entreprises a joué un rôle important dans le processus actuel de destruction d’emplois. La rigidité des salaires est considérée comme allant de pair avec une création nette d'emplois plus faible et des taux plus élevés de faillite d'entreprises. Enfin, la segmentation du marché du travail semble avoir favorisé des destructions d'emplois plus fortes rendues possibles par un nombre croissant de travailleurs temporaires. |
| Keywords: | wage rigidities, job destruction, segmentation, credit constraints |
| JEL: | E24 J23 J63 |
| Date: | 2013–09–23 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaab:152-en&r=lab |
| By: | SELEZNEVA Ekaterina; VAN KERM Philippe |
| Abstract: | This paper exploits data from the German Socio-Economic Panel (SOEP) to re-examine the gender wage gap in Germany on the basis of inequality-adjusted measures of wage differentials which fully account for gender differences in pay distributions. The inequality-adjusted gender pay gap measures are significantly larger than suggested by standard indicators, especially in East Germany. Women appear penalized twice, with both lower mean wages and greater wage inequality. A hypothetical risky investment question collected in 2004 in the SOEP is used to estimate individual risk aversion parameters and benchmark the ranges of inequality-adjusted wage differentials measures. |
| Keywords: | gender gap; wage differentials; wage inequality; expected utility; risk aversion; East and West Germany; SOEP; Singh-Maddala distribution; copula-based selection model |
| JEL: | D63 J31 J70 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2013-18&r=lab |
| By: | Marchetti, Sabrina (European University Institute); Piazzalunga, Daniela (University of Turin); Venturini, Alessandra (University of Turin) |
| Abstract: | Migrants from the Eastern Partnership Countries: Moldova, Ukraine, Belarus, Georgia, Armenia, Azerbaijan has increased in the last ten years. Two different patterns are detected among the most important groups: Ukrainian and Moldovan. The first is mainly composed by women with a temporary migration plan while the second was initially composed by women but rapidly the family reunification was obtained and the migration plan became more permanent. By using the Italian Labour Force survey we analyse the employment situation, the over education of the migrants and their assimilation. |
| Keywords: | migration, labour market |
| JEL: | J15 J26 J61 J62 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7635&r=lab |
| By: | Rafael Lalive; Camille Landais; Josef Zweimüller |
| Abstract: | This paper offers quasi experimental evidence of the existence of spillover effects of UI extensions using a unique program that extended unemployment benefits drastically for a subset of workers in selected regions of Austria. We use non-eligible unemployed in treated regions, and a difference-in-difference identification strategy to control for preexisting differences across treated and untreated regions. We uncover the presence of important spillover effects: in treated regions, as the search effort of treated workers plummets, the job finding probability of untreated workers increases, and their average unemployment duration and probability of long term unemployment decrease. These effects are the largest when the program intensity reaches its highest level, then decrease and disappear as the program is scaled down and finally interrupted. We use this evidence to assess the relevance of different assumptions on technology and the wage setting process in equilibrium search and matching models and discuss the policy implications of our results for the EUC extensions in the US. |
| Keywords: | unemployment insurance; benefit extension; market externality; macro effects |
| JEL: | J65 J21 J22 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:lau:crdeep:13.15&r=lab |
| By: | Andrey Launov (Department of Economics, Johannes Gutenberg-Universitaet Mainz, Germany); Klaus Wälde (Department of Economics, Johannes Gutenberg-Universitaet Mainz, Germany) |
| Abstract: | To which extent does an increase in operating effectiveness of public employment agencies on the one hand and a reduction of unemployment benefits on the other reduce unemployment? Using the recent labour market reform in Germany as background we find that the role of unemployment benefit reduction for the re- duction of unemployment is very modest (7% of the observed decline). Enhanced effectiveness of public employment agencies, to the contrary, explains a substan- tial part (34%) of the observed post-reform unemployment decline. If disincentive effects of PEA reforms had been avoided, the effect could have increased to 51%. |
| Keywords: | Employment agencies, unemployment benefi?ts, labour market reform, unemployment, structural model |
| JEL: | E24 J65 J68 |
| Date: | 2013–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:jgu:wpaper:1307&r=lab |
| By: | Aurora García-Gallego (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Nikolaos Georgantzís (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Ainhoa Jaramillo-Gutiérrez (LEE-Department of Economics, Universitat Jaume I-Castellón, ERICES-University of Valencia, Spain) |
| Abstract: | We study ultimatum bargaining over the wage that should be paid in order to have a subject perform a given real task. Our results are obtained from experiments run in Greece, Spain and the UK. We find significantly higher wage offers and lower acceptance probabilities in the UK than in the other two countries. Interestingly, the combination of these two effects leads to higher wages in the British pool, without reducing market efficiency as compared to Spain and Greece. Country differences in both employer and employee behavior have a clear gender component. |
| Keywords: | ultimatum bargaining, real task, country differences |
| JEL: | C91 D03 J16 J31 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2013/13&r=lab |
| By: | Kollo, Janos (Hungarian Academy of Sciences) |
| Abstract: | The paper looks at how the distribution of jobs by complexity and firms' willingness to hire low educated labor for jobs of different complexity contribute to unskilled employment in Norway, Italy and Hungary. In search of how unqualified workers can attend complex jobs, it compares their involvement in various forms of post-school skills formation. The countries are also compared by the weight of small firms, which are assumed to assist low skilled workers through interpersonal relationships. The data suggest that unskilled employment in Norway benefits from synergies between work in skill-intensive jobs, intense adult training, informal learning and involvement in civil activities. In Italy, workplaces requiring no literacy skills at all have the largest contribution but small businesses tend to employ low educated workers at a large scale even in highly complex jobs. In Hungary, insufficient skills (relative to Norway) and an undersized small-firm sector (relative to Italy) set limits to the inclusion of the low educated. An extreme degree of social isolation is likely to deteriorate their skills and jobs prospects further. |
| Keywords: | skills, skill requirements, unemployment, firm size |
| JEL: | J21 J24 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7632&r=lab |
| By: | Dammert, Ana C. (Carleton University); Ural Marchand, Beyza (University of Alberta, Department of Economics) |
| Abstract: | This paper examines the impact of privatization on gender discrimination in China across firms with different technology intensities. Using a comprehensive firm-level survey, the paper identifies gender wage-productivity differentials by directly estimating the relative productivity levels of workers from the production function of firms. The panel structure of the survey is taken advantage of by following firms that were fully state-owned in the initial year, and distinguishing them from firms that were later privatized. The main results show that privatization was associated with an increase in relative productivity of female workers in high technology industries, and a reduction in relative productivity of female workers in low technology industries. Time varying coefficient results suggest that the improvements in gender outcomes in high technology industries may not be maintained in the long run as the relative wage and productivity ratios tend to deteriorate, potentially due to low supply of highly educated female workers. At the same time, outcomes in privatized low technology industries tend to improve over time, lowering the wage and productivity gaps between male and female workers. |
| Keywords: | Discrimination; Gender; Privatization; Technology |
| JEL: | J16 J31 P20 |
| Date: | 2013–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2013_012&r=lab |
| By: | Guzi, Martin (Masaryk University); de Pedraza, Pablo (Universidad de Salamanca) |
| Abstract: | This paper makes use of a large sample of individual data obtained from web surveys in the WageIndicator project. Data includes extensive information on the quality of working conditions together with different well-being indicators. The paper emphasizes the role of work-related characteristics as a specific and very important aspect of life. In our analysis, we demonstrate the role of working conditions in the following three domains: overall life-satisfaction; satisfaction with one’s job; and satisfaction with the combination of family and work. The paper also contributes to the ongoing debate on web survey data quality, reliability, and validity for scientific use. It demonstrates how social sciences can benefit from the use of web survey data in order to overcome the limits of traditional information sources. |
| Keywords: | subjective well-being, web-surveys, working conditions |
| JEL: | J28 J81 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7618&r=lab |
| By: | Josef Montag (Faculty of Business and Economics, Mendel University in Brno) |
| Abstract: | This paper analyses the effects of state-level differences in labor regulation on labor market outcomes of women in India. I find that labor regulation has a large negative effect on women’s economic activity, mainly employment. A one standard deviation increase in the labor regulation measure decreases the probability of a woman being economically active by 3% to 4%—the implied decrease in female labor force is 15% to 18%. There is no significant effect on the gender wage gap. Finally, labor regulation is associated with women having less say at home and a lower sex ratio. |
| Keywords: | gender gap, labor regulation, India |
| JEL: | J16 J21 K31 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:men:wpaper:40_2013&r=lab |
| By: | Ippei Shibata |
| Abstract: | Despite its low unemployment rate, the recent shift in the Japanese Beveridge curve indicates increased labor mismatch. This paper quantifies the age, employment-type (full or part-time), and occupational mismatch in the Japanese labor market following Sahin and others (2013). Between April 2000 and April 2013, the age mismatch has steadily declined while the occupational and employmenttype mismatch has shown a countercyclical pattern, showing a sharp increase during the global financial crisis. Occupational mismatch accounted for approximtely 20-40 percent of the recent rise in the unemployment rate in Japan. The magnitude was comparable to that of the U.K. and the U.S. |
| Date: | 2013–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:13/196&r=lab |
| By: | Michael Kind |
| Abstract: | In the case of collective redundancies, employers are forced to regard certain characteristics when deciding who is going to be dismissed. This paper develops a procedure to derive an empirical-based weighting scheme between the characteristics relevant for this selection (age, disability, dependencies and tenure). First, panel data from the German Socio-Economic Panel (SOEP) for the years 1991-2010 is used to estimate, conditional on the existence of dismissal protection, the relationships of the four characteristics with respect to reemployment probabilities and the quality of the new job (measured in terms of wage). Second, the individual valuation of the two outcomes is compared applying a life satisfaction analysis. Finally, based on the empirical results a weighting scheme for the characteristics is proposed, which serves as an evidence based guideline for employers, employees and unions in the process of collective redundancies. |
| Keywords: | Dismissal protection; reemployment probability; wage hit |
| JEL: | J63 J64 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0442&r=lab |
| By: | Allegretto, Sylvia (University of California, Berkeley); Dube, Arindrajit (University of Massachusetts Amherst); Reich, Michael (University of California, Berkeley); Zipperer, Ben (University of Massachusetts Amherst) |
| Abstract: | We assess alternative research designs for minimum wage studies. States in the U.S. with larger minimum wage increases differ from others in business cycle severity, increased inequality and polarization, political economy, and regional distribution. The resulting time-varying heterogeneity biases the canonical two-way fixed effects estimator. We consider alternatives including border discontinuity designs, dynamic panel data models, and the synthetic control estimator. Results from four datasets and six approaches all suggest employment effects are small. Covariates are more similar in neighboring counties, and the synthetic control estimator assigns greater weights to nearby donors. These findings also support using local area controls. |
| Keywords: | minimum wage, youth employment, border discontinuity, policy evaluation |
| JEL: | J08 J23 J38 J42 J63 J64 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7638&r=lab |
| By: | Polidano, Cain (Melbourne Institute of Applied Economic and Social Research); Tabasso, Domenico (Melbourne Institute of Applied Economic and Social Research) |
| Abstract: | In OECD countries, 'real world' upper-secondary vocational education and training (VET) programs are used to engage less academically oriented youth in learning, while helping to prepare them for post-school work and/or further training. In general terms, VET programs with high employer involvement, such as apprenticeship schemes, are considered to be superior to classroom-based VET programs that are typically found in many English-speaking countries. In this study, we examine outcomes from a potential 'third way': classroom-based VET with a short-term structured workplace learning component. Using propensity score matching and PISA data linked to information from the Longitudinal Survey of Australian Youth, we find time in workplace learning is associated with higher school completion rates and better employment transitions. |
| Keywords: | educational economics, vocational education and training, workplace learning |
| JEL: | I20 J01 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7633&r=lab |
| By: | Yolanda F. Rebollo-Sanz (Department of Economics, Universidad Pablo de Olavide); Ainara González de San Román (Instituto de Empresa) |
| Abstract: | The main contribution of this paper is to provide researchers with a new estimation method suitable for censored models with two high dimensional fixed effects. This new estimation method is based on a sequence of least squares regressions. In practice, use of this method can result in significant savings in computing time, and it is applicable to datasets where the number of fixed effects makes standard estimation techniques unfeasible. In addition, the paper both analyses the theoretical properties of the procedure and evaluates its practical performance by means of a Monte Carlo simulation study. Finally, it describes an application to the Spanish economy using a Spanish longitudinal match employer-employee dataset which provides wage information on the working population over a 13-year period. In particular, this paper contributes to the empirical literature on wage determination by providing the first decomposition of individual wages for Spain that takes into account both worker and firm effects after adjusting for censoring. This empirical exercise shows that the biases encountered when censored issues are not taken into account can be of sufficient magnitude as to overestimate the role of firm effects in wage dispersion. In our empirical research, individual heterogeneity explains more than 60% of wage dispersion. |
| Keywords: | fixed effects, algorithm, wage decomposition, censoring, simulation, assortative matching |
| JEL: | I21 I24 J16 J31 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:13.05&r=lab |
| By: | Kalpana Kochhar |
| Abstract: | The proposed SDN discusses the specific macro-critical aspects of women’s participation in the labor market and the constraints that prevent women from developing their full economic potential. Building on earlier Fund analysis, work undertaken by other organizations and academic research, the SDN presents possible policies to overcome these obstacles in different types of countries. |
| Keywords: | Women;Labor markets;Gender equality;Employment;Fiscal policy;Developed countries;Emerging markets |
| Date: | 2013–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfsdn:13/10&r=lab |
| By: | Nan Maxwell; Albert Liu; Nathan Wozny; Caroline Massad Francis |
| Keywords: | ADRA, DOL, administrative data, Employment |
| JEL: | J |
| Date: | 2013–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:7900&r=lab |
| By: | Kato, Takao; Kauhanen, Antti |
| Abstract: | Much of the empirical literature on PRP (Performance Related Pay) focuses on a question of whether the firm can increase firm performance in general and enterprise productivity in particular by introducing PRP and if so, how much. However, not all PRP programs are created equal and PRP programs vary significantly in a variety of attributes. This paper provides novel and rigorous evidence on the productivity effect of varying attributes of PRP and shows that the details of PRP indeed matter. In so doing we exploit the panel nature of our Finnish Linked Employer-Employee Data on the details of PRP. We first establish that the omitted variable bias is serious, makes the cross-sectional estimates on the productivity effect of the details of PRP biased upward substantially. Relying on the fixed effect estimates that account for such bias, we find: (i) group incentive PRP is more potent in boosting enterprise productivity than individual incentive PRP; (ii) group incentive PRP with profitability as a performance measure is especially powerful in raising firm productivity; (iii) when a narrow measure (such as cost reduction) is already used, adding another narrow measure (such as quality improvement) yields no additional productivity gain; and (iv) PRP with greater Power of Incentive (the share of PRP in total compensation) results in greater productivity gains yet returns to Power of Incentive diminishes very slowly. |
| JEL: | M52 J33 J24 J53 O53 |
| Date: | 2013–09–26 |
| URL: | http://d.repec.org/n?u=RePEc:rif:wpaper:21&r=lab |
| By: | Kevin Yili Hong (Department of Management Information Systems, Temple University); Alex Chong Wang (Department of Information Systems, City University of Hong Kong); Paul A. Pavlou (Department of Management Information Systems, Temple University) |
| Abstract: | Online labor markets are platforms that facilitate Buyer-Determined (BD) auctions in which buyers can identify and hire service providers who bid to offer IT services. We examine the effect of bid visibility (i.e., open bid versus sealed bid) on the bidders’ entry strategies (number of bids and quality of bids) and auction performance (buyer surplus, contract probability, and buyer satisfaction). We first theoretically analyze equilibrium bidder entry, and we derive hypotheses on the effect of open bid versus sealed bid on bidder strategic entry and auction performance. Using a proprietary large-scale dataset that allows us to observe 1,816,886 bids from 106,147 open bid and 9,950 sealed bid auctions posted on Freelancer.com by 41,530 unique buyers, we find that, while sealed bid BD auctions receive more bids, open bid BD auctions consistently outperform sealed bid BD auctions in terms of the quality of bids and auction performance. Specifically, compared with sealed bid BD auctions, while open bid BD auctions attract 8.1% fewer bids, they receive 3.59% more bids from experienced service providers, they are 50% more likely to get contracted, and they result in at least 19% more in buyer’s surplus. These findings are robust to different econometric specifications and propensity score matching estimators. Our study suggests that empirically, BD auctions do not exhibit revenue equivalence across auction designs, as predicted in the literature. The performance difference is attributed to the “screening effect†of open bid BD auctions that helps filter out low quality, inexperienced, bidders. Notably, the additional bids in sealed bid BD auctions result from the lack of pre-evaluation self-screening, and they are thus unusable, if not harmful, to auction performance by increasing buyers’ bid evaluation costs. Contrary to conventional wisdom and industry practice that expect “the more bids, the betterâ€, which favors sealed bid BD auctions, our results demonstrate that fewer bids (albeit of higher quality), and thus open bid BD auctions, are a preferred option for online labor markets. |
| Keywords: | Auction Design, Online Labor Market, Bid Visibility, Auction Performance |
| JEL: | D44 J49 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1305&r=lab |
| By: | Carlsson, Magnus (Linnaeus University); Fumarco, Luca (Linnaeus University); Rooth, Dan-Olof (Linnaeus University) |
| Abstract: | The advocates of correspondence testing (CT) argue that it provide the most clear and convincing evidence of discrimination. The common view is that the standard CT can identify what is typically defined as discrimination in a legal sense – what we label total discrimination in the current study –, although it cannot separate between preferences and statistical discrimination. However, Heckman and Siegelman (1993) convincingly show that audit and correspondence studies can obtain biased estimates of total discrimination – in any direction – if employers evaluate applications according to some threshold level of productivity. This issue has essentially been ignored in the empirical literature on CT experiments until the appearance of the methodology proposed by Neumark (2012). He shows that with the right data and an identifying assumption, with testable predictions, this method can identify total discrimination. In the current paper we use this new method to reexamine a number of already published correspondence studies to investigate if their estimate of total discrimination is affected by group differences in variances of unobservable characteristics. We also aim at improving the general understanding of to what extent the standardization level of job applications is an issue in empirical work. We find that the standardization level of the job applications being set by the experimenter appear to be a general issue in correspondence studies which must be taken seriously. |
| Keywords: | correspondence studies, discrimination |
| JEL: | J71 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7619&r=lab |