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on Labour Economics |
| By: | Alexander Plum (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg) |
| Abstract: | Are low wages an instrument for the unemployed to switch to high-paying jobs within a medium-term period? Using data from the British Household Panel Survey (BHPS), the labor market dynamics of men are analyzed up to six years after entering unemployment. An alternative econometric approach is presented that allows for correlated random effects between the three labor market states (high-paid employed, low-paid employed and unemployed). The results show that low wages help to significantly reduce the risk of future unemployment. Indications of a “springboard effect” of low wages are found, especially for men without post-secondary education. However, the calculated probability of obtaining a high-paying job is noticeably influenced by the monetary level of the low-wage threshold. |
| Keywords: | low-pay dynamics, simulated correlated multivariate random effects probit model, state dependence, unobserved heterogeneity |
| JEL: | J64 J62 J31 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:mag:wpaper:140004&r=lab |
| By: | Kluve, Jochen (Humboldt University Berlin, RWI); Schmitz, Sebastian (Freie Universität Berlin) |
| Abstract: | Increasing mothers' labor supply is a key policy challenge in many OECD countries. Germany recently introduced a generous parental benefit that allows for strong consumption smoothing after childbirth and, by taking into account opportunity costs of childbearing, incentivizes working women to become mothers and return to the labor force rapidly. Using a sharp regression discontinuity design, we estimate policy impacts for up to 5 years after childbirth and find significant and striking patterns. First, medium-run effects on mothers' employment probability are positive, significant and large, for some subgroups ranging up to 10 per cent. The effects are driven by gains in part-time but not full-time employment. We also find significant increases in working hours. Second, the probability of job continuity rises significantly, i.e. mothers return to their pre-childbirth employer at higher rates. Third, employers reward this return to work by raising job quality significantly and substantially. We argue that the policy generated a profound change in social norms: the new parental benefit defines an "anchor", i.e. a societally preferred point in time at which mothers return to work after childbirth. |
| Keywords: | regression discontinuity, female labor supply, parental benefits |
| JEL: | H31 J13 J22 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8115&r=lab |
| By: | Bossler, Mario (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]) |
| Abstract: | "Using new and unique linked employer-employee data from Germany, I examine the extent to which immigrants sort into worse-paying establishments and worse job positions within establishments. The results demonstrate that recent immigrants are particularly likely to work at low-paying workplaces. Similarly, when examining job positions within establishments, I find that immigrants are employed in lower hierarchical positions. Both the non-random sorting across establishments and the hierarchical sorting within establishments explain much of the immigrant-native wage differential. Policy measures designed to address the wage differential should therefore address immigrants' access to well-paying workplaces and job positions. With respect to career development, immigrant participation in performance assessments is low, and immigrants feel disadvantaged in personnel decisions, which in turn might be relevant channels that explain immigrants' under-representation in well-paid positions." (Author's abstract, IAB-Doku) ((en)) |
| JEL: | J31 J61 |
| Date: | 2014–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:201410&r=lab |
| By: | Grund, Christian (RWTH Aachen University) |
| Abstract: | Making use of panel data from a survey of highly educated professionals, gender pay gaps are explored with regard to total compensation as well as to individual compensation components. The results indicate meaningful male-female wage differentials for this quite homogeneous group of people working in one specific industry: in particular for more experienced employees in higher positions of firm hierarchies with children. Gender pay gaps are much more pronounced for bonus payments than they are for fixed salaries. |
| Keywords: | bonus payments, fixed salaries, gender wage gap, management compensation |
| JEL: | M52 J31 J33 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8112&r=lab |
| By: | Saniter, Nils (DIW Berlin); Siedler, Thomas (University of Hamburg) |
| Abstract: | This study examines the causal link between individuals' occupational knowledge, educational choices, and labor market outcomes. We proxy occupational knowledge with mandatory visits to job information centers (JICs) in Germany while still attending school. Exogenous variation in the location and timing of JIC openings allow estimating causal effects in a difference-in-difference setup. Combining linked survey-administrative data with data on JICs permits to detect whether individuals benefited from the comprehensive information service when they were young. The results suggest that individuals, who went to school in administrative districts with a JIC, have higher educational attainments and a smoother transfer to the labor market than students who did not have access to these facilities. However, we find no effects on individuals' earnings in their first job or later in life. Overall, our results confirm the importance of policies that promote occupational knowledge among young adults. |
| Keywords: | education, uncertainty, job matching, information, job information centers |
| JEL: | I2 J24 J31 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8100&r=lab |
| By: | Görlitz, Katja (Free University of Berlin); Rzepka, Sylvi (RWI) |
| Abstract: | Using data from the National Educational Panel Study of 2009/2010, this paper investigates the relationship between regional training supply and employees' training participation. Controlling for other regional factors such as the local unemployment rate, the educational level, the population density and the regional industry composition, the results indicate that training participation is significantly higher in regions with many firms in the training supply market. The predictive power of the other regional factors is rather minor. |
| Keywords: | training, local labor markets |
| JEL: | J24 R12 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8101&r=lab |
| By: | Colella, Fabrizio |
| Abstract: | This paper analyzes the composition of the wage differentials among part-time and full-time working women in seven European countries: France, Germany, Italy, Netherlands, Spain, Sweden and United Kingdom. Using cross-sectional microdata from the eighth waves of the European Union Statistics on Income and Living Conditions project (EU-SILC), the study investigates the variances in part-time/full-time hourly wage gap and the role of different occupational profiles as a possible explanation. Applying an Oaxaca-Blinder Wage Decomposition, corrected for double sample selection to account for participation decisions and part-time/full-time choice, the adjusted wage gap is found to be negative in all countries except Sweden, where data show a significant part-time premium. Controlling for different job-related characteristics, the research points to a reduction of the gap in all countries; the unexplained portion remains, however, relevant in some countries. In order to shed light on the latter, existing studies are evaluated showing how cross-country dissimilarities can be due to cultural characteristics connected to workers' preferences and different institutional frameworks. |
| Keywords: | Part-Time Endogenous Switching Model Wage Differentials Women |
| JEL: | J0 J3 J5 J7 |
| Date: | 2014–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55287&r=lab |
| By: | Escudero, Veronica |
| Abstract: | This paper examines the effectiveness of active labour market policies (ALMP) in improving labour market outcomes, especially of low-skilled individuals. The empirical analysis consists of an aggregate impact approach based on a pooled cross country and time-series database for 31 advanced countries during the period 1985–2010. A novelty of the paper is that the analysis includes aspects of the delivery system to see how the performance of ALMP is affected by different implementation characteristics. Among the notable results, the paper finds that ALMP matters at the aggregate level. Training, employment incentives, supported employment and direct job creation measures show the most favourable results, both, in terms of reduced unemployment, but also in terms of increased employment and participation. Interestingly, start-up incentives are more effective in reducing unemployment than other ALMP policies. Moreover, the positive effects seem to be particularly beneficial for the low-skilled. In terms of implementation, the paper finds that the most favourable aspect is the allocation of resources to programme administration. Finally, a disruption of policy continuity is associated with negative effects for all labour market variables analysed. |
| Keywords: | unemployment, employment, participation rate, active labour market policies, implementation, public employment services, training, start-up incentives. |
| JEL: | E24 H53 J08 J6 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55319&r=lab |
| By: | Kunze, Astrid (Norwegian School of Economics) |
| Abstract: | This study reconsiders the empirical question of whether men's earnings increase because of children. Large Norwegian register data are used for brother and twin pairs who are followed over their life cycle from their first entry into the labour market. The data permit family-fixed effects to be modeled in various ways, as well as observing earnings growth before and after having children. The simple conditional correlation between children and earnings is positive. When only variation from between-sibling differences is used, the earnings effect post entry into first-fatherhood declines. The effect becomes small and non-significant when we use twins. |
| Keywords: | children, earnings, men, siblings, twins |
| JEL: | J22 J24 J31 J13 J16 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8113&r=lab |
| By: | P. Rupert; G. Zanella |
| Abstract: | We study how becoming a grandparent affects grandparents’ labor supply. In a simple model of the allocation of time in which seniors care about their offspring’s welfare and also value time spent with family children, the sign of the effect is ambiguous. Using data from the Panel Study of Income Dynamics we find evidence that becoming a grandparent causes a reduction of employed grandmother’s hours of work. We identify a lower bound of about 190. This effect originates towards the bottom of the hours distribution (i.e., among women less attached to the labor market). For employed grandfathers, the effect is also negative, originates towards the top of the hours distribution (i.e., where overtime work is substantial), but is smaller and more imprecisely estimated than for women. We also find that for working grandmothers the effect is stronger the closer grandparents and grandchildren live and during the first years since becoming a grandparent (i.e., when the grandchildren are younger). The “extensive margin” of grandparenting (becoming a grandparent) turns out to be much more important in generating these effects than the corresponding “intensive” margin (having additional grandchildren). |
| JEL: | D19 J13 J14 J22 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp937&r=lab |
| By: | Massimo Baldini; Costanza Torricelli; Maria Cesira Urzì Brancati |
| Abstract: | In this paper we analyse household members’ reactions in case of unforeseen negative income shocks due to a transition into unemployment and/or into income support. More specifically, we estimate the impact of an income loss suffered by one household member on the probability that another household member – not necessarily the wife - transit from out of the labour force into employment or into workforce. Since in a lifecycle setting the labour supply of secondary workers is also affected by credit constraints, we take into account financial wealth and liabilities as well as a measure of household illiquidity due to housing. To perform our analyses, we use a discrete choice model and data drawn from the Bank of Italy Survey on Household Income and Wealth (SHIW) over the period 2004-2012, so as to include the effects of the Great Recession. Even after accounting for standard socio-economic controls, results show significant reactions to income shocks, especially during the recession. As for portfolio controls, we find a significant difference (mostly in terms of intercept, but also of slope) between the level of illiquidity and labour market participation for households hit/not hit by a shock. |
| Keywords: | household labour decisions, household portfolios, discrete-choice models |
| JEL: | D12 D14 J22 C25 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:mod:wcefin:14104&r=lab |
| By: | Gibbs, Michael (University of Chicago); Neckermann, Susanne (Erasmus University Rotterdam); Siemroth, Christoph (University of Mannheim) |
| Abstract: | We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams. Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ideas. |
| Keywords: | innovation, creativity, intrinsic motivation, incentives |
| JEL: | C93 J24 M52 O32 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8096&r=lab |
| By: | Hartog, Joop (University of Amsterdam); Diaz-Serrano, Luis (Universitat Rovira i Virgili) |
| Abstract: | While uncertainty abounds in almost any decision on investment in schooling, it is mostly ignored in research and virtually absent in labour economics text books. This paper documents the scope for risk, discusses the tough disentanglement of heterogeneity and risk, surveys the analytical models, laments the absence of a good workhorse model and points out the challenges worth tackling: document ex ante risk that investors face, develop a tractable and malleable analytical model and integrate the option of consumption smoothing in analytical and empirical work. Hedging labour market risk in the stock market can be safely ignored. |
| Keywords: | schooling, risk, human capital, labour supply |
| JEL: | I21 J22 J24 J31 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8110&r=lab |
| By: | James Heckman (University of Chicago); John Eric Humphries (University of Chicago); Gregory Veramendi (Arizona State University); Sergio Urzua (University of Maryland) |
| Abstract: | This paper develops and estimates a model with multiple schooling choices that identifies the causal effect of different levels of schooling on health, health-related behaviors, and labor market outcomes. We develop an approach that is a halfway house between a reduced form treatment effect model and a fully formulated dynamic discrete choice model. It is computationally tractable and identifies the causal effects of educational choices at different margins. We estimate distributions of responses to education and find evidence for substantial heterogeneity in unobserved variables on which agents make choices. The estimated treatment effects of education are decomposed into the direct benefits of attaining a given level of schooling and indirect benefits from the option to continue on to further schooling. Continuation values are an important component of our estimated treatment effects. While the estimated causal effects of education are substantial for most outcomes, we also estimate a quantitatively important effect of unobservables on outcomes. Both cognitive and socioemotional factors contribute to shaping educational choices and labor market and health outcomes. We improve on LATE by identifying the groups affected by variations in the instruments. We find benefits of cognition on most outcomes apart from its effect on schooling attainment. The benefits of socioemotional skills on outcomes beyond their effects on schooling attainment are less precisely estimated. |
| Keywords: | education, early endowments, factor models, health, treatment effects |
| JEL: | C32 C38 I12 I14 I21 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2014-007&r=lab |
| By: | Godart, Olivier (Kiel Institute for the World Economy); Görg, Holger (Kiel Institute for the World Economy); Hanley, Aoife (Kiel Institute for the World Economy) |
| Abstract: | We explore whether the introduction of trust based working hours is related to the subsequent innovation performance of firms. Employing a panel data set of over 5,000 German establishments, we implement a propensity score matching approach where we only consider firms that did not use trust based work contracts initially. Our results show that firms which adopt such contracts tend to be between 11 to 14 percent more likely to improve products. These results hold when we control for another form of flexible time work arrangements, namely working time accounts. Thus, the positive relationship between the adoption of trust based working hours and innovation seems to be driven by the degree of control and self-management over working days, rather than by merely allowing time flexibility. |
| Keywords: | trust based work time, innovation, firm performance |
| JEL: | M54 M12 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8097&r=lab |
| By: | Artheya, Kartik (Federal Reserve Bank of Richmond); Owens, Andrew (Federal Reserve Bank of Richmond); Schwartzman, Felipe (Federal Reserve Bank of Richmond) |
| Abstract: | The aftermath of the recent recession has seen numerous calls to use transfers to poorer households as a means to enhance aggregate activity. We show that the key to understanding the direction and size of such interventions lies in labor supply decisions. We study the aggregate impact of short-term redistributive economic policy in a standard incomplete-markets model. We characterize analytically conditions under which redistribution leads to an increase or decrease in effective hours worked, and hence, output. We then show that under the parameterization that matches the wealth distribution in the U.S. economy (Castaneda et al., 2003), wealth redistribution leads to a boom in consumption, but not in output. |
| Keywords: | Multipliers; Redistribution; Labor supply; Idiosyncratic Risk |
| JEL: | D90 E21 E25 E63 |
| Date: | 2014–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedrwp:14-04&r=lab |
| By: | Rothstein, Jesse; Valletta, Robert G. |
| Abstract: | Despite unprecedented extensions of available unemployment insurance (UI) benefits during the “Great Recession†of 2007-09 and its aftermath, large numbers of recipients exhausted their maximum available UI benefits prior to finding new jobs. Using SIPP panel data and an eventstudy regression framework, we examine the household income patterns of individuals whose jobless spells outlast their UI benefits, comparing the periods following the 2001 and 2007-09 recessions. Job loss reduces household income roughly by half on average, and for UI recipients benefits replace just under half of this loss. Accordingly, when benefits end the household loses UI income equal to roughly one-quarter of total pre-separation household income (and about one-third of pre-exhaustion household income). Only a small portion of this loss is offset by increased income from food stamps and other safety net programs. The share of families with income below the poverty line nearly doubles. These patterns were generally similar following the 2001 and 2007-09 recessions and do not vary dramatically by household age or income prior to job loss. |
| Keywords: | Social and Behavioral Sciences |
| Date: | 2014–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:indrel:qt74x2f4jh&r=lab |
| By: | Lassila, Jukka; Valkonen, Tarmo |
| Abstract: | Can longer working lives bring sufficient tax revenues to pay for the growing public health and care expenditure that longer lifetimes cause? We review studies concerning retirement decisions and pension policies, the role of mortality in health and long-term care costs, and errors in mortality projections. We combine key results into a numerical OLG model where changes in mortality have direct effects both on working careers and on per capita use of health and long-term care services. The model has been calibrated to the Finnish economy and demographics. Although there are huge uncertainties concerning future health and long-term care expenditure when people live longer, our simulations show that without policies directed to disability admission rules and old-age pension eligibility ages, working lives are unlikely to extend sufficiently. But, importantly, with such policies it seems quite possible that generations enjoying longer lifetimes can also pay for the full costs by working longer. |
| Keywords: | life expectancy, working careers, health and long-term care expenditure, fiscal sustainability |
| JEL: | H30 H63 H68 J11 |
| Date: | 2014–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:rif:wpaper:24&r=lab |