|
on Labour Economics |
|
Issue of 2013‒12‒29
fifty-one papers chosen by Erik Jonasson National Institute of Economic Research |
| By: | Johannes F. Schmieder; Till M. von Wachter; Stefan Bender |
| Abstract: | This paper provides estimates of the causal effect of unemployment duration on wages. The paper shows that if the path of reemployment wages throughout the unemployment spell does not shift in response to unemployment insurance (UI) extensions this implies reservation wages do not bind. Under this condition, UI extensions can be used as an instrumental variable (IV) to obtain the average causal effect of unemployment duration among all individuals whose unemployment duration responds to the policy change. UI extensions occurring with exact age in Germany had small but precisely estimated effects on wages, without affecting the path of reemployment wages. The resulting IV estimates yield substantial negative effects of unemployment duration on wages of 0.8% per month. This estimate implies that declines in wage offers over the unemployment spell can explain about a third of average wage declines at unemployment, and that wage reductions can substantially raise the costs of long-term unemployment. |
| JEL: | J64 J65 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19772&r=lab |
| By: | Egebark, Johan (Department of Economics, Stockholm University); Kaunitz, Niklas (SOFI, Stockholm University) |
| Abstract: | In 2007, the Swedish employer-paid payroll tax was cut on a large scale for young workers, substantially reducing labor costs for this group. We estimate a small impact, both on employment and on wages, implying a labor demand elasticity for young workers at around -0.31. Since the tax reduction applied also to excisting employments, the cost of the reform was sizable, and the estimated cost per created job is at more than four times that of directly hiring workers at the average wage. Hence, we conclude that payroll tax cuts are an inefficient way to boost employment for young individuals. |
| Keywords: | Youth unemployment; Payroll tax; Tax subsidy; Labor costs; Exact matching |
| JEL: | H25 H32 J23 J38 J68 |
| Date: | 2013–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2013_027&r=lab |
| By: | Matano, Alessia (University of Barcelona); Naticchioni, Paolo (University of Rome 3) |
| Abstract: | This paper aims at disentangling the role played by different explanations on the urban wage premium along the wage distribution. We analyze the wage dynamics of migrants from lower to higher density areas in Italy, using quantile regressions and individual data. The results show that unskilled workers benefit more from a wage premium accruing over time, while skilled workers enjoy a wage premium when they migrate as well as a wage increase over time. Further, we find that for unskilled workers the wage growth over time is mainly due to human capital accumulation, consistently with the "learning" hypothesis, while for skilled workers it is the "coordination" hypothesis that matters. |
| Keywords: | urban wage premium, human capital, spatial sorting, wage distribution, quantile fixed effects |
| JEL: | J31 J61 R23 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7811&r=lab |
| By: | Charles L. Baum; Christopher J. Ruhm |
| Abstract: | Using data from the 1997 cohort of the National Longitudinal Survey of Youth (NLSY-97), we examine the effects of California’s first in the nation government-mandated paid family leave program (CA-PFL) on mothers’ and fathers’ use of leave during the period surrounding child birth, and on the timing of mothers’ return to work, the probability of eventually returning to pre-childbirth jobs, and subsequent labor market outcomes. Our results show that CA-PFL raised leave-taking by around 2.4 weeks for the average mother and just under one week for the average father. The timing of the increased leave use – immediately after birth for men and around the time that temporary disability insurance benefits are exhausted for women – is consistent with causal effects of CA-PFL. Rights to paid leave are also associated with higher work and employment probabilities for mothers nine to twelve months after birth, possibly because they increase job continuity among those with relatively weak labor force attachments. We also find positive effects of California’s program on hours and weeks of work during their child’s second year of life and possibly also on wages. |
| JEL: | J1 J18 J2 J3 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19741&r=lab |
| By: | Casey B. Mulligan; Trevor S. Gallen |
| Abstract: | Our paper documents the large labor market wedges created by taxes, subsidies, and regulations included in the Affordable Care Act. The law changes terms of trade in both goods and factor markets for firms offering health insurance coverage. We use a multi-sector (intra-national) trade model to predict and quantify consequences of the Affordable Care Act for the patterns of output, labor usage, and employee compensation. We find that the law will significantly redistribute from high-wage workers to low-wage workers and to non-workers, reduce total factor productivity about one percent, reduce per-capita labor hours about three percent (especially among low-skill workers), reduce output per capita about two percent, and reduce employment less for sectors that ultimately pay employer penalties. |
| JEL: | H3 I13 J2 J3 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19771&r=lab |
| By: | Edwards, Rebecca (University of Sydney); Lange, Fabian (McGill University) |
| Abstract: | Three fundamental forces have shaped labor markets over the last 50 years: the secular increase in the returns to education, educational upgrading, and the integration of large numbers of women into the workforce. We modify the Katz and Murphy (1992) framework to predict the structure of the labor market in 2030. Even though the share of educated females in the workforce will grow rapidly, the supply response will not suffice to offset the trend in demand towards skilled, female labor. Wage growth over the next 20 years will continue to favor college educated workers and in particular college educated females. |
| Keywords: | wage growth, trends in labor demand and supply |
| JEL: | J11 J21 J22 J23 J31 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7825&r=lab |
| By: | Ward-Warmedinger, Melanie E. (European Central Bank); Macchiarelli, Corrado (London School of Economics) |
| Abstract: | This paper presents information on labour market mobility in 23 EU countries, using Eurostat's Labour Force Survey (LFS) data over the period 1998-2008. More specifically, it discusses alternative measures of labour market churning; including the ease with which individuals can move between employment, unemployment and inactivity over time. The results suggest that the probability of remaining in the same labour market status between two consecutive periods is high for all countries. Nonetheless, transitions from unemployment and inactivity back into the labour market are relatively weak in the euro area and central eastern European EU (CEE EU) countries compared to Denmark and, particularly, Sweden. Moreover, comparisons of transition probabilities over time suggest that – until the onset of the financial crisis – the probability of remaining in unemployment over two consecutive periods decreased in Sweden, the euro area, and, to a lesser extent, Denmark, while it increased in the average CEE EU countries. At the same time, however, successful labour market entries (from outside the labour market) increased in the average CEE EU countries, Denmark and Sweden. On the basis of an index for labour markets turnover used in the paper (Shorrocks, 1987), labour markets in Spain, Luxemburg, the Netherlands, Denmark and Sweden are the most mobile on average, with these results mainly reflecting higher mobility of people below the age of 29, highly educated and female workers. We also find that mobility of all worker groups has generally increased over time in the euro area, Denmark and Sweden. Finally, we ask whether some of the observed changes in mobility can be broadly restraint to some "macro" explanatory factors, including part time and temporary employment, unemployment and structure indicators. The results provide a mixed picture, suggesting that the sense of mobility strongly varies across countries. |
| Keywords: | transition probabilities, labour market mobility, LFS micro data, EU countries |
| JEL: | J21 J60 J82 E24 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7814&r=lab |
| By: | Fitzenberger, Bernd; Sommerfeld, Katrin; Steffes, Susanne |
| Abstract: | The effects of childbirth on future labor market outcomes are a key issue for policy discussion. This paper implements a dynamic treatment approach to estimate the effect of having the first child now versus later on future employment for the case of Germany, a country with a long maternity leave coverage. Effect heterogeneity is assessed by estimating ex post outcome regressions. Based on SOEP data, we provide estimates at a monthly frequency. The results show that there are very strong negative employment effects after childbirth. Although the employment loss is reduced over the first five years following childbirth, it does not level off to zero. The employment loss is lower for mothers with a university degree. It is especially high for medium-skilled mothers with long prebirth employment experience. We find a significant reduction in the employment loss for more recent childbirths. -- |
| Keywords: | Female labor supply,Maternity leave,Dynamic treatment effect,Inverse Probability Weighting |
| JEL: | C14 J13 J22 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:13107&r=lab |
| By: | Nizalova, Olena Y. (Kyiv School of Economics); Sliusarenko, Tamara (Technical University of Denmark) |
| Abstract: | Motherhood is usually associated with lower wages due to a number of reasons such as career interruptions, potentially decreased productivity/effort, and discrimination. Earlier literature provides a range of estimates from an up to 20% wage penalty in economies with more flexible labor markets to virtually zero in more family-supportive settings. We focus on a country with de jure family supportive labor laws, which de facto has developed very flexible pro-employer hiring and firing practices. We seek to understand whether this status quo has any implication for the country's concern related to lowest low fertility. Ukrainian Longitudinal Monitoring Survey provides the data to estimate the motherhood wage penalty in Ukraine during the period from 1997 to 2004. Controlling for individual unobserved heterogeneity we find that the wage penalty is approximately 6.5% per one child and 13.2% for two or more children. In addition, we find that the level of education and the timing of first birth has an impact on the motherhood wage penalty. It is smallest for females with vocational/professional education, and virtually disappears if female in this group gave first birth after 20 years old. Females with low educational level even receive wage premium of 15% if they delay first birth until after 30 years. |
| Keywords: | motherhood wage penalty, pro-natalist policy, discrimination |
| JEL: | J31 J13 J71 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7810&r=lab |
| By: | Theodore, Koutmeridis |
| Abstract: | During the past four decades both between and within group wage inequality increased significantly in the US. I provide a microfounded justification for this pattern, by introducing private employer learning in a model of signaling with credit constraints. In particular, I show that when financial constraints relax, talented individuals can acquire education and leave the uneducated pool, this decreases unskilled inexperienced wages and boosts wage inequality. This explanation is consistent with US data from 1970 to 1997, indicating that the rise of the skill and the experience premium coincides with a fall in unskilled-inexperienced wages, while at the same time skilled or experienced wages do not change much. The model accounts for: (i) the increase in the skill premium despite the growing supply of skills; (ii) the understudied aspect of rising inequality related to the increase in the experience premium; (iii) the sharp growth of the skill premium for inexperienced workers and its moderate expansion for the experienced ones; (iv) the puzzling coexistence of increasing experience premium within the group of unskilled workers and its stable pattern among the skilled ones. The results hold under various robustness checks and provide some interesting policy implications about the potential conflict between inequality of opportunity and substantial economic inequality, as well as the role of minimum wage policy in determining the equilibrium wage inequality. |
| Keywords: | wage inequality, experience premium, skill premium, employer learning, signaling, financial constraints, minimum wages, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:edn:sirdps:467&r=lab |
| By: | Pinheiro, Roberto; Visschers, Ludo |
| Abstract: | Workers in less secure jobs are often paid less than identical-looking workers in more secure jobs. We show that this lack of compensating differentials for unemployment risk can arise in equilibrium when all workers are identical and firms differ only in job security (i.e. the probability that the worker is not sent into unemployment). In a setting where workers search for new positions both on and off the job, the worker's marginal willingness to pay for job security is endogenous: it depends on the behavior of all firms in the labor market and increases with the rent the employing firm leaves to the worker. We solve for the labor market equilibrium, finding that wages increase with job security for at least all firms in the risky tail of the distribution of firm-level unemployment risk. Meanwhile, unemployment becomes persistent for low-wage and unemployed workers, a seeming pattern of 'unemployment scarring' created entirely by firm heterogeneity. Higher in the wage distribution, workers can take wage cuts to move to more stable employment. |
| Keywords: | Layoff Rates, Unemployment risk, Wage Differentials, Unemployment Scarring, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:edn:sirdps:500&r=lab |
| By: | Baltagi, Badi H. (Syracuse University); Rokicki, Bartlomiej (Warsaw University) |
| Abstract: | This paper analyzes the Polish wage curve using individual data from the Polish Labor Force Survey (LFS) at the 16 NUTS2 regions over the period 1999 - 2010. This survey does not gather information on wages of self-employed or paid family workers. After excluding the unemployed, inactive and missing observations, we are left with over 102,924 observations. We find evidence in favor of the Polish wage curve with an unemployment elasticity of -0.06. We also find that males in Poland are significantly more responsive to local unemployment rates (-0.08) than their female counterparts (-0.04). Moreover, if the lagged unemployment rate is used as an instrument for current unemployment rate, we find that the unemployment elasticity increases substantially for less experienced and temporary workers. |
| Keywords: | wage curve, fixed effects, regional labor markets |
| JEL: | C26 J30 J60 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7812&r=lab |
| By: | Velden R.K.W. van der; Badillo-Amador L.; Allen J.P. (GSBE) |
| Abstract: | The strong wage effects related to mismatches between a workers education and that required in the job are usually attributed to assignment theory. This theory asserts that productivity and wages depend on the education-job match, which determines the utilization of skills. However, recent research shows that educational mismatches are only weakly related to skill utilization, which in any case fails to account for the bulk of the wage effects. Two alternative theories have been put forward to explain the observed wage effects. One points to wage setting institutions that cause wages to be based on job characteristics regardless of individual performance, the other to the heterogeneity of skills within a given educational level. Both theories explain existing results, but have never been tested directly. In this paper we show that the former theory explains observed wage effects in the public sector, and the latter theory those in the private sector. |
| Keywords: | Wage Level and Structure; Wage Differentials; Public Sector Labor Markets; Labor-Management Relations, Trade Unions, and Collective Bargaining: General; |
| JEL: | J31 J45 J50 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umagsb:2013071&r=lab |
| By: | Ichino, Andrea (University Bologna); Schwerdt, Guido (Ifo Institute for Economic Research); Winter-Ebmer, Rudolf (Department of Economics, University of Linz, and Institute for Advanced Studies, Vienna); Zweimüller, Josef (Department of Economics, University of Zurich) |
| 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: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:ihs:ihsesp:302&r=lab |
| By: | Fang, Tony (Monash University); Lin, Carl (Beijing Normal University) |
| Abstract: | Since China promulgated new minimum wage regulations in 2004, the magnitude and frequency of changes in the minimum wage have been substantial, both over time and across jurisdictions. This paper uses county-level minimum wage panel data and a longitudinal household survey from 16 representative provinces to estimate the employment effects of minimum wage changes in China over the period of 2004 to 2009. In contrast to the mixed results of previous studies using provincial-level data, we present evidence that minimum wage changes have significant adverse effects on employment in the Eastern and Central regions of China, and result in disemployment for females, young adults, and low-skilled workers. |
| Keywords: | minimum wage, China, employment |
| JEL: | J38 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7813&r=lab |
| By: | Nilhil Jha (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Cain Polidano (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) |
| Abstract: | Previous studies have linked Catholic schooling to higher academic achievement. We add to the literature on Catholic schooling by examining its effect on long-term wage rates in Australia, independent of effects on academic achievement. Using panel data from the Household, Income and Labour Dynamics Australia (HILDA) Survey and fixed effects estimation, we find that during the prime-time of a career, wage rates for Catholic school graduates progress with labor market experience at a greater rate, on average, than wage rates for public school graduates. Importantly, we find no evidence to suggest that these benefits are peculiar to Catholic schooling, with similar benefits estimated for graduates of independent private schools. These findings suggest that private schooling may be important in not only fostering higher academic achievement, but also in better preparing students for a working life. |
| Keywords: | Catholic schooling, wages |
| JEL: | I20 J31 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2013n39&r=lab |
| By: | Allmendinger, Jutta; Hipp, Lena; Stuth, Stefan |
| Abstract: | To assess the influence of nonstandard employment for the labor market participation of different demographic groups, we provide detailed descriptions of the development of atypical employment in comparison to standard employment, unemployment, and economic inactivity between 1996 and 2011. In our analyses, we distinguish between fixedterm employment, solo self-employment, substantial part-time work (between 20 and 35 hours/week), and marginal part-time work (less than 20 hours/week). By simultaneously considering standard employment, atypical employment, and non-employment, we are able to assess the consequences of flexible labor markets for the economic integration of different population groups, such as women, the elderly, young people, or the low-skilled. -- |
| Keywords: | Labor Market,Nonstandard Employment,Atypical Employment,Part-time,Temporary Jobs,Solo self-employment,International Comparison,Europe |
| JEL: | J21 J23 J82 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbpre:p2013003&r=lab |
| By: | Kohei, Kawamura; József, Sákovics |
| Abstract: | We analyse a labour matching model with wage posting, where re flecting institutional constraints firms cannot differentiate their wage offers within certain subsets of workers. Inter alia, we find that the presence of impersonal wage offers leads to wage compression, which propagates to the wages for high productivity workers who receive personalised offers. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:edn:sirdps:445&r=lab |
| By: | Charlotte Cabane; Andrew E. Clark |
| Abstract: | We here ask whether sports participation at school is positively correlated with adult labour-market outcomes. There are many potential channels for this effect, although, as usual, identifying a causal relationship is difficult. We appeal to two widely-separated waves of Add Health data to map out the correlation between school sports and adult labour-market outcomes. We show that different types of school sports are associated with different types of jobs and labour-market insertion when adult. We take the issue of the endogeneity of sport seriously and use data on siblings in order to obtain estimates that are as close to unbiased as possible. Last, we compare the effect of sporting activities to that of other leisure activities. |
| Keywords: | Job characteristics, Education, Sport, School |
| JEL: | J24 J13 L83 I2 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1253&r=lab |
| By: | Stéphane Auray (CREST-ENSAI); David L. Fuller (Concordia University); damba Lkhagvasuren (Concordia University) |
| Abstract: | In the US unemployment insurance (UI) system, only a fraction of those eligible for benefits actually collect them. We estimate this fraction using CPS data and detailed state-level eligibility criteria. It averaged 77% from 1989 - 2012 and is negatively correlated with the unemployment rate. These empirical facts are explained in an equilibrium search model where firms finance UI benefits and are heterogeneous with respect to their specific tax rate, which is experience rated. In equilibrium, low tax firms effectively offer workers an alternative UI scheme featuring a faster job arrival rate and a higher wage offer. Some eligible workers prefer the “market" scheme and thus do not collect UI. The model captures the negative correlation between the take-up and unemployment rate. If all eligible unemployed collect, benefit expenditures increase by 16% and welfare increases. Average search effort decreases, but the unemployment rate and duration decrease as vacancy creation increases |
| Keywords: | Unemployment insurance, Take-up, Matching frictions, Search |
| JEL: | E61 J32 J64 J65 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:crs:wpaper:2013-12&r=lab |
| By: | Hartmut Lehmann; Anzelika Zaiceva |
| Abstract: | This paper takes stock of informal employment in Russia analysing its incidence and determinants. Using the regular 2003-11 waves and an informality supplement of the Russian Longitudinal Monitoring Survey (RLMS) it develops several measures of informal employment and demonstrates that the incidence varies widely across the different definitions. We also show that the determinants of informal employment are roughly stable across the different measures: workers who are males, relatively young, unskilled and employed in construction and trade and related services have a higher likelihood to have an informal job. We also take a look at the issue of labour market segmentation along the informal-formal divide by estimating an informal-formal wage gap at the means and across the entire wage distributions. We find only weak evidence for labour market segmentation in Russia when estimating an informal-formal wage gap for salaried workers at the mean. The results of quantile regressions show a wage penalty in the lower half of the distribution and no gap in the upper half for informal employees. In contrast, informal self-employed and entrepreneurs have conditional mean wages that are higher than the mean wages for the formally employed. Across the entire wage distribution, however, we find a negative wage gap in the lowest quartile and a strongly positive wage gap in the highest quartile, pointing to a segmented informal sector with a lower free entry tier and an upper rationed tier. This Working Paper relates to the 2014 OECD Economic Survey of the Russian Federation (www.oecd.org/eco/surveys/russia). L'emploi informel en Russie : Définitions, incidence, déterminants et segmentation du marché du travail Ce document de travail propose un bilan sur l'emploi informel en Russie et analyse son incidence et ses déterminants. En utilisant les données régulières 2003-11 et un supplément sur l'informalité de l'Enquête "Russian Longitudinal Monitoring Survey" (RLMS), nous suggérons plusieurs mesures de l'emploi informel et démontrons que l'incidence varie considérablement selon les différentes définitions. Nous montrons également que les déterminants de l'emploi informel sont à peu près stables avec les différentes mesures: les travailleurs hommes, relativement jeunes, non qualifiés et employés dans la construction et le commerce et les services connexes ont une probabilité plus élevée d'avoir un emploi informel. Nous examinons également la question de la segmentation du marché du travail en terme de division entre marché formel et informel en estimant l'écart de salaire entre secteurs en moyenne et sur l'ensemble de la distribution des salaires. Nous ne trouvons que de faibles signes de segmentation du marché du travail en Russie pour l'estimation à la moyenne. Les résultats des régressions par quantile montrent une pénalité salariale pour les employés informels dans la moitié inférieure de la distribution et pas de différence dans la moitié supérieure. En revanche, les indépendants et les entrepreneurs du secteur informel ont des salaires moyens conditionnels plus élevés que les salaires moyens pour l'emploi formel. Sur l'ensemble de la distribution des salaires, cependant, nous constatons un écart salarial négatif dans le quartile inférieur et un écart salarial fortement positive dans le quartile le plus élevé, indiquant un secteur informel segmenté avec libre entrée dans le bas et du rationnement dans le haut. Ce Document de travail se rapporte à l’Étude économique de l’OCDE 2014 sur la Fédération de Russie (www.oecd.org/etudes/russie). |
| JEL: | J31 J40 P23 |
| Date: | 2013–12–04 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1098-en&r=lab |
| By: | Lehmann, Etienne (CRED, Université Panthéon Assas Paris 2); Montero Ledezma, Paola L. (IRES, Université catholique de Louvain); Van der Linden, Bruno (IRES, Université catholique de Louvain) |
| Abstract: | This article examines unemployment disparities and efficiency in a densely populated economy with two job centers and workers distributed between them. We introduce commuting costs and search-matching frictions to deal with the spatial mismatch between workers and firms. In equilibrium, there exists a unique threshold location where job-seekers are indifferent between job centers. In a decentralized economy job-seekers do not internalize a composition externality they impose on all the unemployed. Their decisions over job-search are thus typically not optimal and hence the equilibrium unemployment rates are inefficient. We calibrate the model for Los Angeles and Chicago Metropolitan Statistical Areas. Simulations exercises suggest that changes in the workforce distribution have non-negligible effects on unemployment rates, wages and net output. |
| Keywords: | spatial mismatch, commuting, urban unemployment, externality, United States |
| JEL: | J64 R13 R23 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7828&r=lab |
| By: | Natalia Kyui |
| Abstract: | This paper analyzes the effects of an educational system expansion on labour market outcomes, drawing upon a 15-year natural experiment in the Russian Federation. Regional increases in student intake capacities in Russian universities, a result of educational reforms, provide a plausibly exogenous variation in access to higher education. Additionally, the gradual nature of this expansion allows for estimation of heterogeneous returns to education for individuals who successfully took advantage of increasing educational opportunities. Using simultaneous equations models and a non-parametric model with essential heterogeneity, the paper identifies strong positive returns to education in terms of employment and wages. Marginal returns to higher education are estimated to decline for lower levels of individual unobserved characteristics that positively influence higher education attainment. Finally, the returns to higher education are found to decrease for those who, as a result of the reforms, increasingly pursued higher education. |
| Keywords: | Development economics; Labour markets |
| JEL: | J24 I20 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:13-45&r=lab |
| By: | Eric A. Hanushek; Guido Schwerdt; Simon Wiederhold; Ludger Woessmann |
| Abstract: | Existing estimates of the labor-market returns to human capital give a distorted picture of the role of skills across different economies. International comparisons of earnings analyses rely almost exclusively on school attainment measures of human capital, and evidence incorporating direct measures of cognitive skills is mostly restricted to early-career workers in the United States. Analysis of the new PIAAC survey of adult skills over the full lifecycle in 22 countries shows that the focus on early-career earnings leads to underestimating the lifetime returns to skills by about one quarter. On average, a one-standard- deviation increase in numeracy skills is associated with an 18 percent wage increase among prime-age workers. But this masks considerable heterogeneity across countries. Eight countries, including all Nordic countries, have returns between 12 and 15 percent, while six are above 21 percent with the largest return being 28 percent in the United States. Estimates are remarkably robust to different earnings and skill measures, additional controls, and various subgroups. Intriguingly, returns to skills are systematically lower in countries with higher union density, stricter employment protection, and larger public-sector shares. |
| JEL: | I20 J31 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19762&r=lab |
| By: | Anghel, Brindusa (FEDEA, Madrid); de la Rica, Sara (University of the Basque Country); Lacuesta, Aitor (Bank of Spain) |
| Abstract: | This article analyzes changes in the occupational employment share in Spain for the period 1997-2012 and the way particular sociodemographic adapt to those changes. There seems to be clear evidence of employment polarization between 1997 and 2012 that accelerates over the recession. Changes in the composition of the labour supply cannot explain the increase in the share of occupations at the low end of the wage distribution. Sector reallocation might have partially contributed to explain the polarization process in Spain during the years of expansion (1997-2007) but it is a minor factor during the recession. The polarization of occupations within sectors observed especially during the recession appear to be related to a decline in routine tasks which is compensated by an increase in occupations with non-routine service contents, which are found both in the low and high end of the wage distribution. Instead, jobs intensive in abstract contents do not appear to increase their share in total employment during these 15 years. The paper finds that this process has affected males more strongly than females because of their higher concentration in occupations more intensive in routine tasks. Among males, for workers under 30 years we find a decrease in the share of occupations with more routine tasks which turns into increases in others with more abstract content and particularly with more non-routine service content. Instead, male workers over 30 years seem to remain in declining occupations to a greater extent. Females of different ages are not affected by the abovementioned changes. |
| Keywords: | routinization, job tasks, employment polarization, business cycle |
| JEL: | E24 J24 J62 O33 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7816&r=lab |
| By: | Kodama, Naomi; Odaki, Kazuhiko |
| Abstract: | This paper proposes a new empirical method to measure the gap between wage and productivity of workers. Our method aggregates Mincer-type human capital function of all workers of a firm and obtains the total labor input. We put it into the Cobb-Douglas production function and estimate the coefficients of gap between wage and productivity. Applying the method to employer-employee matched panel data, we find that wagetenure profile and productivity-tenure profile intersect twice. The wage is higher than the productivity in junior years, then surpassed by the productivity in middle age, and becomes higher again in late career. The results are consistent with both of Becker's firm sponsored training model and Lazear's deferred compensation model. |
| Keywords: | Productivity, Human capital, Production function, Wage |
| JEL: | D24 J24 L23 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:hit:cisdps:612&r=lab |
| By: | Miranda, Alfonso (CIDE, Mexico City); Zhu, Yu (University of Kent) |
| Abstract: | We investigate the extent to which deficiency at English as measured by English as Additional Language (EAL), contribute to the immigrant-native wage gap for female employees in the UK, controlling for covariates. To deal with the endogeneity of EAL and a substantial problem of self-selection into employment we suggest a 3-step estimator (TSE). The properties of this estimator are investigated in a Monte Carlo simulation study and we show evidence that TSE delivers a consistent and asymptotically normal estimator. We find a large and statistically significant causal effect of EAL on the immigrant-native wage gap for women. |
| Keywords: | English as Additional Language (EAL), immigrant-native wage gap, endogenous treatment, sample selection |
| JEL: | J15 J31 J61 C21 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7841&r=lab |
| By: | Singer, Christine (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Toomet, Ott-Siim |
| Abstract: | "We analyze the impact of the GermanWeGebAU programs, which are government-subsidized training measures for employed workers over 45 years old. We apply a dynamic matching approach similar to Crépon et al. (2009) and exploit novel information contained in rich German registry data. We focus on the effects on survival probability in original employment and estimate the effects separately by gender, age, job status, and program duration. We find that WeGebAU training improves the probability of remaining in paid employment by 1.0 to 2.5 percentage points in the two-year period following treatment. The effect is more pronounced for part-time workers and longer-duration program participants. Our analysis suggests that postponed labor market withdrawal is the main driver of the positive effects and that there is selection into treatment at the firm level." (Author's abstract, IAB-Doku) ((en)) |
| JEL: | J18 J14 I21 |
| Date: | 2013–12–17 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:201321&r=lab |
| By: | Laura Márquez-Ramos (Department of Economics and Instituto de Economía Internacional, Universitat Jaume I, Castellón, Spain) |
| Abstract: | This paper hypotheses that diverging trends for skill premium might arise from fragmentation in countries at various stages of economic development. Then, individual wage data are brought directly to capture the evolution of high-skilled and low-skilled wages across industries in two EU countries that represent the "two faces" of fragmentation: an old-EU country (Germany) and a transition new- EU country (Slovenia). Results obtained provide evidence about the magnitude of potential losses suffered by low-skilled workers in high- skill-intensive industries in Germany. Otherwise, the relative wage of low-skilled workers in relation to high- skilled workers has increased with fragmentation in Slovenia. Furthermore, the consequences of increasing fragmentation are also reflected on industry wage premiums, as this paper shows that fragmentation reduces the wage premium in low-skill-intensive industries in Germany and Slovenia. |
| Keywords: | fragmentation, skill premium, industry premium, Germany, Slovenia, panel data |
| JEL: | F16 J31 C23 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2013/18&r=lab |
| By: | Michèle Belot (University of Edinburgh) Marina Schröder (University of Magdeburg) |
| Abstract: | We provide field experimental evidence of the effects of monitoring in a context where productivity is multi-dimensional and only one dimension is monitored and incentivised. We hire students to do a job for us. The job consists of identifying euro coins. We study the effects of monitoring and penalising mistakes on work quality, and evaluate spillovers on non-incentivised dimensions of productivity (punctuality and theft). We find that monitoring improves work quality only if incentives are large, but reduces punctuality substantially irrespectively of the size of incentives. Monitoring does not affect theft, with ten per cent of participants stealing overall. Our setting also allows us to disentangle between possible theoretical mechanisms driving the adverse effects of monitoring. Our findings are supportive of a reciprocity mechanism, whereby workers retaliate for being distrusted. |
| Keywords: | counterproductive behaviour, monitoring, experiment. |
| JEL: | C93 J24 J30 M42 M52 |
| Date: | 2013–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:238&r=lab |
| By: | Martin Gervais; Nir Jaimovich; Henry E. Siu; Yaniv Yedid-Levi |
| Abstract: | The search-and-matching model of the labor market fails to match two important business cycle facts: (i) a high volatility of unemployment relative to labor productivity, and (ii) a mild correlation between these two variables. We address these shortcomings by focusing on technological learning-by-doing: the notion that it takes workers time using a technology before reaching their full productive potential with it. We consider a novel source of business cycles, namely, fluctuations in the speed of technological learning and show that a search-and-matching model featuring such shocks can account for both facts. Moreover, our model provides a new interpretation of recently discussed “news shocks.” |
| JEL: | E24 E32 J64 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19767&r=lab |
| By: | Grossman, Gene M.; Helpman, Elhanan; Kircher, Philipp |
| Abstract: | We develop a neoclassical trade model with heterogeneous factors of production. We consider a world with two factors, labor and .managers., each with a distribution of ability levels. Production combines a manager of some type with a group of workers. The output of a unit depends on the types of the two factors, with complementarity between them, while exhibiting diminishing returns to the number of workers. We examine the sorting of factors to sectors and the matching of factors within sectors, and we use the model to study the determinants of the trade pattern and the effects of trade on the wage and salary distributions. Finally, we extend the model to include search frictions and consider the distribution of employment rates. |
| Keywords: | heterogeneous labor, matching, sorting, productivity, wage distribution, international trade, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:edn:sirdps:501&r=lab |
| By: | Gary Burtless; Barry P. Bosworth |
| Abstract: | The Great Recession had a large impact on unemployment rates and growth in wealthy industrial countries. When the recession began most rich countries were experiencing an increase in labor force participation rates after age 60. This paper examines whether the downturn slowed or reversed the trend toward higher old-age participation rates. We use straightforward time series analysis to test for a break in labor force trends after 2007. Our results indicate that the average rate of increase in labor force participation slowed in only a handful of countries. Averaging across all 20 countries in our sample, we find that the average pace of labor force participation increase was faster after 2007 than before. Countries that experienced unusually severe downturns represent exceptions to this generalization. In most countries, however, the trend toward later retirement not only continued, it accelerated. |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2013-23&r=lab |
| By: | Charness, Gary (University of California, Santa Barbara); Cobo-Reyes, Ramón (University of Essex); Lacomba, Juan A. (Universidad de Granada); Lagos, Francisco (Universidad de Granada); Pérez, José María (Universidad de Granada) |
| Abstract: | This article examines whether social comparisons have behavioral effects on workers' performance when a firm can choose workers' wages or let them choose their own. Firms can delegate the wage decision to neither, one or both workers in the firm. We vary the information workers receive, finding that social comparisons concerning both wages and decision rights affect workers' performance. Moreover, the relative effect of discrimination in relation to decision rights is larger than in relation to wage. We find these treatment effects with both stated effort and a real-effort task, suggesting that both approaches may yield similar results. |
| Keywords: | delegation, gift-exchange, experiment |
| JEL: | C91 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7802&r=lab |
| By: | Gillian Kingston (Economic and Social Research Institute and Department of Sociology, Trinity College Dublin); Frances McGinnity (Economic and Social Research Institute and Department of Sociology, Trinity College Dublin); Philip J. O’Connell (UCD Geary Institute, University College Dublin) |
| Abstract: | Previous research shows that immigrants, in common with other groups that suffer disadvantage in the labour market, are more vulnerable during recession (Hoynes et al., 2012; McGinnity et al., 2013; Sierminska and Takhtamanova, 2010). However, little research has focused on the impact of the Great Recession on work-related discrimination. We examine the extent to which discrimination varies across different national-ethnic groups, and whether discrimination increased between 2004, during an economic boom, and 2010, in the midst of a severe recession. Our analysis draws on two large-scale nationally representative surveys on the experience of labour market discrimination. We find that overall immigrants do experience higher rates of work based discrimination, however discrimination does not increase with the recession. We find substantial variation in discrimination across national-ethnic groups, and indicate that ethnicity plays an important influence on the experience of discrimination. |
| Keywords: | Discrimination, recession, nationality, ethnicity, labour market |
| JEL: | J61 J71 |
| Date: | 2013–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:201323&r=lab |
| By: | Donado, Alejandro |
| Abstract: | Most empirical studies have estimated a positive union-nonunion “injury gap,” suggesting that unionized workers are more likely to have a nonfatal occupational injury than their nonunion counterparts. Using individual-level panel data for the first time, I study several explanations for this puzzling result. I find that controlling for time-invariant individual fixed effects already reduces the gap by around 40%. Some of the explanations that I study contribute in reducing this gap even further. I, however, do not find evidence of the gap becoming negative and the impact of unions on nonfatal injuries appears to be insignificant at best. |
| Keywords: | labor unions; occupational health and safety; working conditions; panel data |
| Date: | 2013–12–23 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0551&r=lab |
| By: | Eichhorst, Werner (IZA); Boeri, Tito (Bocconi University); De Coen, An (IDEA Consult); Galasso, Vincenzo (Bocconi University); Kendzia, Michael J. (IWSB); Steiber, Nadia (Vienna University of Economics and Business) |
| Abstract: | This paper provides an overview of the employment situation of young and old workers in the EU Member States, setting out the most recent development during the crisis and dealing with policies implemented to promote the employment of both groups. The evidence collected shows that there is no competition between young and older workers on the labour market. Structural or general policies to enhance the functioning of EU labour markets are crucial to improving the situation of both groups. However, the responsibility for employment policies still predominantly lies within Member States of the European Union, although initiatives taken at the EU level can provide added value, particularly through stimulating the exchange of experiences and facilitating regional and cross-border mobility throughout the EU. |
| Keywords: | youth unemployment, older workers, Europe, demographic change |
| JEL: | J11 J14 J18 J13 J63 J64 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7829&r=lab |
| By: | Razzak, Weshah |
| Abstract: | A persistent increase in the unemployment rate ignites speculations about whether the changes to unemployment are structural or cyclical. The New Zealand economy has been through major restructuring since the mid-1980s. The labour market’s institutional changes were the last in the sequence of these reforms. As reforms began to take effect and expectations adjusted, unemployment in New Zealand has declined steadily and persistently since 1993-1994. Along the way, however, transitory increases in unemployment occurred. Major increases occurred after the Asian financial crisis and the global financial crisis with similar dynamics. |
| Keywords: | Natural Rate of Unemployment, Speed of adjustment of the New Zealand labour market, estimation |
| JEL: | C2 C3 J60 |
| Date: | 2013–12–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:52462&r=lab |
| By: | Diana Warren (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) |
| Abstract: | This paper provides new evidence of coordination of retirement by mature age couples in Australia. Two complementary estimation approaches are used to highlight the importance of taking the household decision-making context into account when modeling the retirement behaviour of partnered men and women. First, a single risk hazard model provides insights into the influences of a spouse’s characteristics on the retirement decision of the individual. Second, a competing-risks framework is used to examine the retirement behaviour of couples exiting from a situation in which both are in paid employment. There is strong evidence of coordination of retirement by mature age couples in Australia due to complementarities in leisure and, for women, because of caring responsibilities. In particular, the results suggest that women may delay their own retirement if their partner has a financial incentive to continue in the labour force; or retire early to care for a partner who is in poor health. |
| Keywords: | Retirement, older workers, households, leisure, complementarity |
| JEL: | D13 J26 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2013n41&r=lab |
| By: | Adalbert Mayer (Washington College); Theodore L. Turocy (University of East Anglia) |
| Abstract: | Agents with a richer set of opportunities to trade should be able to demand better terms of trade. For instance, workers who are otherwise equally-qualified may differ in their access to vacancies, e.g. because their social networks are larger or smaller. We present a model of search and matching in which multiple workers may be matched to the same vacancy, and workers compete directly in the wage bargining process. Workers with greater access have a higher dynamic outside option and demand higher wages. They are therefore unsuccessful candidates in some matches; this latter outcome is not possible in existing models based on Nash bargaining to determine wages. In particular, when markets are tight and the expected length of a position is short, workers with better access to opportunities will remain unemployed longer than those with less access. |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:uea:aepppr:2012_52&r=lab |
| By: | Mariya Mileva; Sebastian Braun; Wolfgang Lechthaler |
| Abstract: | Fears of increasing inequality play a dominant role in current debates on how globalization is affecting our economies. After a brief review of recent trends in wage inequality, this policy paper presents new insights on the dynamic effect of trade liberalization on wage inequality. In the context of a dynamic trade model with costly labour mobility (Lechthaler and Mileva, 2013), we show that the effect of trade liberalization on wage inequality depends on i) the time horizon considered, ii) the degree of worker mobility, and iii) the degree of trade liberalization (partial/full). In the short-run, observed increases in wage inequality are driven by an increase in inter-sectoral wage inequality, while in the long run, wage inequality is driven by an increase in the skill premium. |
| Keywords: | Challenges for welfare system, globalisation, labour markets, macroeconomic disequilibria |
| JEL: | F10 F20 J30 J60 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:feu:wfewop:y:2013:m:12:d:0:i:49&r=lab |
| By: | Sonja Jovicic (Schumpeter School, University of Wuppertal); Ronald Schettkat (Schumpeter School, University of Wuppertal) |
| Abstract: | This paper investigates whether the ‘big tradeoff’ between efficiency and inequality exists, and analyzes empirically the relationship between inequality, redistribution, and employment/unemployment. The analysis is based on a cross-country longitudinal data set (panel data) of 21 OECD countries in the period 1980 to 2010. We use inequality and redistribution measures (output indicators) rather than institutional variables (input indicators) as independent variables. We do not find a significant effect of income and wage distribution on labor market performance and cannot confirm the hypothesized ‘big tradeoff’. |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:bwu:schdps:sdp13009&r=lab |
| By: | Konstantinos, Angelopoulos; James, Malley; Apostolis, Philippopoulos |
| Abstract: | This paper develops a dynamic general equilibrium model to highlight the role of human capital accumulation of agents differentiated by skill type in the joint determination of social mobility and the skill premium. We first show that our model captures the empirical co-movement of the skill premium, the relative supply of skilled to unskilled workers and aggregate output in the U.S. data from 1970-2000. We next show that endogenous social mobility and human capital accumulation are key channels through which the effects of capital tax cuts and increases in public spending on both pre- and post-college education are transmitted. In particular, social mobility creates additional incentives for the agents which enhance the beneficial effects of policy reforms. Moreover, the dynamics of human capital accumulation imply that, post reform, the skill premium is higher in the short- to medium-run than in the long-run. |
| Keywords: | social mobility, skill premium, tax and education policy, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:edn:sirdps:482&r=lab |
| By: | Winters, John V. (Oklahoma State University) |
| Abstract: | Previous research suggests that the local stock of human capital creates positive externalities within local labor markets and plays an important role in regional economic development. However, there is still considerable uncertainty over what types of human capital are most important. Both national and local policymakers in the U.S. have called for efforts to increase the stock of college graduates in science, technology, engineering, and mathematics (STEM) fields, but data availability has thus far prevented researchers from directly connecting STEM education to human capital externalities. This paper uses the 2009-2011 American Community Survey to examine the external effects of college graduates in STEM and non-STEM fields on the wages of other workers in the same metropolitan area. I find that both types of college graduates create positive wage externalities, but STEM graduates create much larger externalities. |
| Keywords: | human capital externalities, STEM, wage growth, agglomeration |
| JEL: | J24 R23 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7830&r=lab |
| By: | Barmby, Tim (University of Aberdeen); Sessions, John G. (University of Bath); Zangelidis, Alexandros (University of Aberdeen) |
| Abstract: | We build a model of worker interdependence in which two workers can either compete or cooperate and compare performance under either scenario to that of a single worker working in isolation. We show that whilst competition unequivocally reduces performance, cooperation may raise or lower performance. Employing a unique data set in which workgroups are comprised of either one or two workers, we are able to test explicitly for the presence of cooperation. We find empirical support for cooperative behavior. |
| Keywords: | absence, worker interdependency |
| JEL: | J33 J41 J54 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7803&r=lab |
| By: | van Ham, Maarten (Delft University of Technology); Manley, David (University of Bristol) |
| Abstract: | The literature on neighbourhood effects suggests that the lack of social mobility of some groups has a spatial dimension. It is thought that those living in the most deprived neighbourhoods are the least likely to achieve upward mobility because of a range of negative neighbourhood effects. Most studies investigating such effects only identify correlations between individual outcomes and their residential environment and do not take into account that selection into neighbourhoods is a non-random mechanism. This paper investigates occupational mobility between 1991 and 2001 for those who were employed in Scotland in 1991 by using unique longitudinal data from Scottish Longitudinal Study (SLS). We add to the existing literature by investigating neighbourhood effects on occupational mobility separately for social renters, private renters and home owners. We find that 'neighbourhood effects' are strongest for home owners, which is an unexpected finding. We argue that the correlation between characteristics of the residential environment and occupational mobility can be explained by selection effects: homeowners with the least resources, who are least likely to experience upward mobility, are also most likely to sort into the most deprived neighbourhoods. Social housing tenants experience less selective sorting across neighbourhoods as other than market forces are responsible for the neighbourhood sorting mechanism. |
| Keywords: | neighbourhood effects, occupational mobility, deprivation, selective mobility, longitudinal data |
| JEL: | I30 J60 R23 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7815&r=lab |
| By: | Edo, Anthony; Jacquemet, Nicolas; Yannelis, Constantine |
| Abstract: | This paper investigates the importance of ethnic homophily in the hiring discrimination process, and provides a novel test for statistical discrimination. Our evidence comes from a correspondence test performed in France, in which we use three different kinds of ethnic identification: French sounding names, North African sounding names, and “foreign” sounding names with no clear ethnic association. Within both male and female groups, we show that all non-French applicants are equally discriminated against when compared to French applicants. This indicates that racial discrimination in employment is directed against members of non-majority ethnic groups, and highlights the importance of favoritism for in-group members. Moreover we find direct evidence of homophily: recruiters with European names are more likely to call back French named applicants and female recruiters are more likely to call back women. The paper also directly tests for statistical discrimination by adding a signal related to language skill ability in all resumes sent to half the job offers. Although the signal inclusion significantly impacts the discrimination experienced by non-French females, it is much weaker for male minorities. |
| Keywords: | correspondence testing; gender discrimination; racial discrimination; ethnic homophily; language skills |
| JEL: | J15 J64 J71 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpm:docweb:1313&r=lab |
| By: | Yasuhiro Sato (Graduate School of Economics, Osaka University); Yves Zenou (Research Institute of Industrial Economics (IFN), Stockholm University) |
| Abstract: | We develop a model where unemployed workers in the city can find a job either directly or through weak or strong ties. We show that, in denser areas, individuals choose to interact with more people and meet more random encounters (weak ties) than in sparsely populated areas. We also demonstrate that, for a low urbanization level, there is a unique steady-state equilibrium where workers do not interact with weak ties, while, for a high level of urbanization, there is a unique steady-state equilibrium with full social interactions. We show that these equilibria are usually not socially efficient when the urban population has an intermediate size because there are too few social interactions compared to the social optimum. Finally, even when social interactions are optimal, we show that there is over-urbanization in equilibrium. |
| Keywords: | Weak ties, strong ties, social interactions, urban economics, labor market |
| JEL: | J61 R14 R23 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1332&r=lab |
| By: | Philip Du Caju (National Bank of Belgium, Research Department); Theodora Kosma (Bank of Greece); Martina Lawless (Central Bank of Ireland); Julian Messina (World Bank; Universitat de Girona); Tairi Rõõm (Eesti Pank, Estonia) |
| Abstract: | The rarity with which firms reduce nominal wages has been frequently observed, even in the face of considerable negative economic shocks. This paper uses a unique survey of fourteen European countries to ask firms directly about the incidence of wage cuts and to assess the relevance of a range of potential reasons for why they avoid cutting wages. Concerns about the retention of productive staff and a lowering of morale and effort were reported as key reasons for downward wage rigidity across all countries and firm types. Restrictions created by collective bargaining were found to be an important consideration for firms in euro area countries but were one of the lowest ranked obstacles in non-euro area countries. The paper examines how firm characteristics and collective bargaining institutions affect the relevance of each of the common explanations put forward for the infrequency of wage cuts. |
| Keywords: | labour costs, wage rigidity, firm survey, wage cuts, European Union |
| JEL: | J30 J32 J33 J51 C81 P5 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:201312-251&r=lab |
| By: | Masashi Tanaka (Graduate School of Economics, Osaka University) |
| Abstract: | In the real world, two types of education investment may exist. One of these contributes to labor skills, and the other does not, corresponding to human capital and signal invest- ment, respectively. The question is how individuals determine the ratio of these alternative investments. In response, we formulate an overlapping generations economy where the rich and the poor invest in both types of education. We argue that the ratio of human capital to signal investment is a U-shaped function of the wage differentials between the rich and the poor. Moreover, we identify three patterns of stable steady states for these wage differentials, namely, no-inequality, high-inequality, and multiple steady states. Using these results, we conclude that exogenous factors, such as skill-biased technical change, may switch the steady state from no-inequality to high-inequality, and as a result, the ratio of human capital to signal investment changes in a U-shaped form during the transition to the new steady state. |
| Keywords: | human capital investment, signal investment, wage differentials, multiple steady states, overlapping generations |
| JEL: | D31 D80 I24 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1331&r=lab |
| By: | Kroencke, Tim A.; Muehler, Grit; Sprietsma, Maresa |
| Abstract: | Human capital contracts give private investors the right to share of students' future earnings in return for a financial contribution during their studies. Although still rarely used, human capital contracts could not only help to completement limited public funding for higher education but might also be an alternative to traditional financial assets. Using a dataset covering 1% of German households for the period 1995-2009, we analyse the return and risk properties that can be expected from human capital contracts. We find that funds of human capital contracts provide low risk exposures to stocks and bonds. As a result, risk-adjusted returns of funds of human capital contracts are signicantly positive under fairly weak conditions. Thus, human capital contracts potentially offer large diversification benefits for investors and might be a way to improve the state's educational budget -- |
| Keywords: | human capital returns,human capital contracts,risk and return of non-traded assets,mean-variance spanning tests |
| JEL: | I21 J24 G11 G12 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:13108&r=lab |