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on Labour Economics |
| By: | Schmieder, Johannes F. (Boston University); Wachter, Till von (University of California, Los Angeles); Bender, Stefan (Institute for Employment Research (IAB), Nuremberg) |
| Abstract: | This paper estimates the causal effect of long-term unemployment on wages. Job search theory implies that if Unemployment Insurance (UI) extensions do not affect wages conditional on the month of unemployment exit, then reservation wages do not bind on average. Then, UI extensions affect mean wages only through unemployment durations and are valid instrumental variables (IV). Using a regression discontinuity design, we find that UI extensions in Germany reduced job searchers' reemployment wages on average, but did not affect wages conditional on unemployment duration. Resulting IV estimates imply substantial negative effects of unemployment duration on wages of 0.8% per month. |
| Keywords: | long-term unemployment, wage losses, unemployment insurance |
| JEL: | J64 J65 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8700&r=lab |
| By: | Mai Dao; Davide Furceri; Prakash Loungani |
| Abstract: | We examine patterns of regional adjustments to shocks in the US during the past four decades. We find that the response of interstate migration to relative labor market conditions has decreased, while the role of the unemployment rate as absorber of regional shocks has increased. However, the response of net migration to regional shocks is stronger during aggregate downturns and increased particularly during the Great Recession. We offer a potential explanation for the cyclical pattern of migration response based on the variation in consumption risk sharing. |
| Keywords: | Labor markets;United States;Regional shocks;Labor demand;Unemployment;Labor mobility;Migrations;Regional economics;Interstate migration, labor mobility, regional labor markets |
| Date: | 2014–11–25 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:14/211&r=lab |
| By: | Alexander V. Larin (National Research University Higher School of Economics) |
| Abstract: | This paper investigates the sources of the downward nominal wage rigidity in Russia. The empirical analysis is based on the RLMS-HSE household survey from 2004 to 2013. We show that, in spite of weak labor unions in Russia, the extent of downward nominal wage rigidity is high. Moreover, the probability of a wage freeze is decreasing in firm size and is lower for industries with industry-level tarif agreements. Our ndings present empirical evidence that the main source of the downward nominal wage rigidity is not the labor unions, but firms' voluntary decision to prevent wage cuts, which may cause quits of valuable employees and/or a decrease in their efforts |
| Keywords: | Downward nominal wage rigidity, RLMS-HSE |
| JEL: | J31 J51 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:86/ec/2014&r=lab |
| By: | Donal O'Neill (Economics, National University of Ireland, Maynooth); |
| Abstract: | This paper analyses economists’ support for the Fair Minimum Wage Act of 2013, by examining the characteristics of almost 1000 economists who signed open letters either supporting or opposing the Bill prior to a Senate debate on the legislation. In contrast to previous work, which found that economists’ disagreements were surprisingly random, I find systematic differences between those economists supporting the legislation and those opposing it. There is evidence of a saltwater-freshwater divide in attitudes, with support for the Bill stronger for economists located further from Chicago. In addition support for the legislation is higher among females and those who obtained their PhD outside the US. Financial economists are more likely to oppose the Bill, while those specialising in labour economics are more likely to support it. Furthermore the support among labour economists is strongest for academics who have received their PhD in recent years. This may reflect the impact of recent work in labour economics challenging the traditional competitive model of labour markets. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:may:mayecw:n256-14.pdf&r=lab |
| By: | Ahrens, Steffen (Technische Universität Berlin); Pirschel, Inske (Kiel Institute for the World Economy); Snower, Dennis J. (Kiel Institute for the World Economy) |
| Abstract: | We present a new theory of wage adjustment, based on worker loss aversion. In line with prospect theory, the workers' perceived utility losses from wage decreases are weighted more heavily than the perceived utility gains from wage increases of equal magnitude. Wage changes are evaluated relative to an endogenous reference wage, which depends on the workers' rational wage expectations from the recent past. By implication, employment responses are more elastic for wage decreases than for wage increases and thus firms face an upward-sloping labor supply curve that is convexly kinked at the workers' reference price. Firms adjust wages flexibly in response to variations in labor demand. The resulting theory of wage adjustment is starkly at variance with past theories. In line with the empirical evidence, we find that (1) wages are completely rigid in response to small labor demand shocks, (2) wages are downward rigid but upward flexible for medium sized labor demand shocks, and (3) wages are relatively downward sluggish for large shocks. |
| Keywords: | downward wage sluggishness, loss aversion |
| JEL: | D03 D21 E24 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8699&r=lab |
| By: | Miriam Rinawi (Department of Business Administration, University of Zurich); Matthias Krapf (Faculty of Business and Economics, Université de Lausanne); Uschi Backes-Gellner (Department of Business Administration, University of Zurich) |
| Abstract: | In this paper, we study the role of occupational skills in individuals’ labor market transitions. Using rich data on skills required in occupations, we introduce a concept of occupation-specific human capital and develop empirical measures for occupational specificity and occupation distance. We find a strong relationship between the degree of occupational specificity and individuals’ mobility patterns and wages. In particular, after layoffs, individuals with more occupation-specific human capital are less likely to find reemployment in a different occupation and are more likely to suffer prolonged periods of unemployment. We also find that, upon reemployment, these individuals receive a wage premium. These results suggest a risk-return tradeoff to educational investments into more specific human capital. In addition, we develop a measure for the distance between occupations and find that individuals who move to occupations with similar skill requirements (i.e. lower distance) suffer smaller wage losses than individuals with more distant moves. Thus, we show that skills are transferable across occupations and that occupational specificity largely determines mobility patterns and wages after layoffs. |
| Keywords: | Keywords: occupational mobility, layoffs, unemployment, human capital, skills, occupational training. |
| JEL: | J62 J63 J64 J24 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:iso:educat:0103&r=lab |
| By: | Supreet Kaur |
| Abstract: | This paper tests for downward nominal wage rigidity in markets for casual daily agricultural labor in a developing country context. I examine transitory shifts in labor demand, generated by rainfall shocks, in 600 Indian districts from 1956-2009. First, there is asymmetric adjustment: nominal wages rise in response to positive shocks but do not fall during droughts. Second, transitory positive shocks generate ratcheting: after they have dissipated, nominal wages do not adjust back down. Third, inflation moderates these effects, enabling downward real wage adjustments both during droughts and after positive shocks. Fourth, wage distortions generate employment distortions, creating boom and bust cycles: employment is 9% lower in the year after a transitory positive shock than if the positive shock had not occurred. Fifth, consistent with the misallocation of labor across farms, households with small landholdings increase labor supply to their own farms when they are rationed out of the external labor market. The results are not consistent with other transmission mechanisms, such as migration or capital accumulation. These findings indicate the presence of rigidities in a setting with few institutional constraints. Survey evidence suggests that workers and employers believe that nominal wage cuts are unfair and lead to effort reductions. |
| JEL: | E24 J31 O10 O12 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20770&r=lab |
| By: | Bryson, Alex (National Institute of Economic and Social Research (NIESR)); Clark, Andrew E. (Paris School of Economics); Freeman, Richard B. (Harvard University); Green, Colin P. (Lancaster University) |
| Abstract: | We show that worker wellbeing is not only related to the amount of compensation workers receive but also how they receive it. While previous theoretical and empirical work has often been pre-occupied with individual performance-related pay, we here demonstrate a robust positive link between the receipt of a range of group performance schemes (profit shares, group bonuses and share ownership) and job satisfaction. Critically, this relationship remains after conditioning on wage levels, which suggests these pay methods provide utility to workers in addition to that through higher wages. These findings survive a variety of methods aimed at accounting for unobserved individual and job-specific characteristics. We investigate two potential channels for this effect. We first demonstrate that half of the positive effect can be accounted for by employees' tendency to reciprocate in return for the "gift" of share capitalism. Second, we show that these 'share capitalist' modes of pay dampen the negative wellbeing effects of what we typically think of as "bad" aspects of job quality. Finally, share-capitalist pay methods also have positive wellbeing spill-over effects on co-workers. |
| Keywords: | compensation methods, wages, job satisfaction, working conditions |
| JEL: | J28 J33 J54 J63 J81 M52 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8724&r=lab |
| By: | Akarçay- Gürbüz, Ayça; Polat, Sezgin |
| Abstract: | We evaluate public-private sector wage differentials in Turkey for the years 2005 and 2011, a period marked by educational upgrading and restructuring in public employment. Using micro data from Household Labour Force Surveys we find a positive premium for low wage earners and a penalty of working in the public sector at the higher end of the distribution. Although the penalty has not disappeared, the price effect has increased, especially at the end of the distribution owing to a relatively uneven wage increase in the private sector along the distribution, rather than an explicit public wage policy. |
| Keywords: | employment; wage differentials; decomposition; quantile regression |
| JEL: | C31 J31 J45 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:60872&r=lab |
| By: | Bütler, Monika (University of St. Gallen); Deuchert, Eva (University of St. Gallen); Lechner, Michael (University of St. Gallen); Staubli, Stefan (University of Calgary); Thiemann, Petra (University of Southern California) |
| Abstract: | Disability insurance (DI) beneficiaries lose part of their benefits if their earnings exceed certain thresholds (“cash-cliffs”). This implicit taxation is considered the prime reason for low DI outflow. We analyse a conditional cash program that incentivises work related reductions of disability benefits in Switzerland. 4,000 randomly selected DI recipients receive an offer to claim up to CHF 72,000 (USD 71,000) if they expand work hours and reduce benefits. Initial reactions to the program announcement, measured by call-back rates, are modest; individuals at cash-cliffs react more frequently. By the end of the field phase, the take-up rate amounts to only 0.5%. |
| Keywords: | disability insurance, field experiment, financial incentive, return-to-work |
| JEL: | H55 J14 C93 D04 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8715&r=lab |
| By: | Lehmann, Hartmut (University of Bologna) |
| Abstract: | Even though informal employment is wide-spread in transition economies the literature on this phenomenon in the region is rather scarce. For policy makers it is important to know the incidence and the determinants of informal employment. In the first part of the paper we demonstrate that its incidence and to a lesser degree its determinants depend on the definition used. We then discuss studies that attempt to test for labor market segmentation in transition economies along the formal-informal divide. The presented results are inconclusive and we come to the conclusion that more work needs to be done before we can make definitive statements about whether labor markets are integrated or segmented in transition economies. Last but not least we introduce a new research area that links risk preferences and selection into labor market states. We show that if individuals have a choice, relatively risk loving workers have an increased likelihood to choose informal employment and self-employment. |
| Keywords: | informal employment, definitions, determinants, risk preferences, transition economies |
| JEL: | D03 J43 P23 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8687&r=lab |
| By: | Ryan Chahrour (Boston College); Sanjay K. Chugh (Boston College); Tristan Potter (Boston College) |
| Abstract: | We estimate a search-based real business cycle economy using quantity data and a broad set of wage indicators, allowing the latent wage to follow a non-structural ARMA process. Under the estimated process, wages adjust immediately to most shocks and induce substantial variation in labor's share of surplus. These results are not consistent with either a rigid real wage or Nash bargaining. The model fit is excellent, and smoothed realizations of the wage are consistent with empirical measures. According to the model, shocks to intertemporal preferences are the primary cause of inefficient fluctuations in the labor market and the driver of variation in labor's share of surplus. |
| Keywords: | Search and Matching, Wage Determination, DSGE, Bayesian Estimation |
| JEL: | E32 E24 |
| Date: | 2014–12–17 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:867&r=lab |
| By: | Epstein, Gil S. (Bar-Ilan University); Gafni, Dalit (College of Management, Rishon Lezion Campus); Siniver, Erez (College of Management, Rishon Lezion Campus) |
| Abstract: | Economic outcomes are compared for university graduates in Israel belonging to four different ethnic groups. A unique dataset is used that includes all individuals who graduated with a first degree from universities and colleges in Israel between the years 1995 and 2008 and which tracks them for up to 10 years from the year they graduated. The main finding is that education and experience appear to have a strong effect on earnings in the long run and that an ethnic group can improve its position relative to specific groups while it has no effects relative to other groups. |
| Keywords: | wage differences, immigrants, discrimination |
| JEL: | J15 J24 J31 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8737&r=lab |
| By: | Emanuele Ciani (Bank of Italy); Vincenzo Mariani (Bank of Italy) |
| Abstract: | We analyse how the labour market implicitly evaluates Italy's higher education system by estimating differences in employment and earnings across universities. We use our estimates to produce three rankings of universities based, respectively, on employment, earnings and employment-weighted earnings. By controlling for a large set of covariates, we isolate each university effect on employment and earnings from additional components influencing graduates' labour market outcomes, namely the university's field of specialization, the graduates' observable characteristics and their local labour markets. To account for the latter, we include graduates' employment rate in the region of residence among the covariates but we instrument it with prior residence in order to correct for endogenous sorting. We discuss pros and cons of our methodology and compare our results with other available university rankings. |
| Keywords: | university ranking, higher education, labour market |
| JEL: | I23 J24 J31 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_247_14&r=lab |
| By: | Orrenius, Pia M. (Federal Reserve Bank of Dallas); Zavodny, Madeline (Agnes Scott College) |
| Abstract: | The United States currently provides Temporary Protected Status (TPS) to more than 300,000 immigrants from selected countries. TPS is typically granted if dangerous conditions prevail in the home country due to armed conflict or a natural disaster. Individuals with TPS cannot be deported and are allowed to stay and work in the United States temporarily. Despite the increased use of TPS in recent years, little is known about how TPS affects labor market outcomes for beneficiaries, most of whom are unauthorized prior to receiving TPS. This study examines how migrants from El Salvador who are likely to have received TPS fare in the labor market compared with other migrants. The results suggest that TPS eligibility leads to higher employment rates among women and higher earnings among men. The results have implications for recent programs that allow some unauthorized immigrants to receive temporary permission to remain and work in the United States. |
| Keywords: | immigration policy, unauthorized immigration, temporary protected status, TPS |
| JEL: | J15 J31 J61 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8744&r=lab |
| By: | Richard Duhautois (Centre d'Etudes de l'Emploi et Université Paris-Est Marne-la-Vallée); Christine Erhel (Centre d'Etudes de l'Emploi et Centre d'Economie de la Sorbonne); Mathilde Guergoat-Larivière (Conservatoire National des Arts et Métiers (LIRSA) et Centre d'Etudes de l'Emploi) |
| Abstract: | Using conditional dynamic multinomial logit models that allow to disentangle between state dependence and unobserved heterogeneity, this article proposes an empirical analysis of labour market mobility in the European Union based on EU-SILC data. It shows that the role of true state dependence varies a lot across social groups (according to age, sex and education) and across countries. In particular, state dependence can be related for the different social groups and country groups studied to various structural explanations in terms of institutional arrangements (education and retirement policies, leave policies, childcare policies, labour market policies…) and/or to employers' behaviour. |
| Keywords: | Labour market mobility, state dependence, unobserved heterogeneity, European Union, inequalities, institutions. |
| JEL: | J60 J62 J64 J68 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:14082&r=lab |
| By: | Chung, Hess (Federal Reserve Board of Governors); Fallick, Bruce C. (Federal Reserve Bank of Cleveland); Nekarda, Christopher J. (Federal Reserve Board of Governors); Ratner, David (Federal Reserve Board of Governors) |
| Abstract: | This paper describes a dynamic factor model of 19 U.S. labor market indicators, covering the broad categories of unemployment and underemployment, employment, workweeks, wages, vacancies, hiring, layoffs, quits, and surveys of consumers’ and businesses’ perceptions. The resulting labor market conditions index (LMCI) is a useful tool for gauging the change in labor market conditions. In addition, the model provides a way to organize discussions of the signal value of different labor market indicators in situations when they might be sending diverse signals. The model takes the greatest signal from private payroll employment and the unemployment rate. Other infl uential indicators include the insured unemployment rate, consumers’ perceptions of job availability, and help-wanted advertising. Through the lens of the LMCI, labor market conditions have improved at a moderate pace over the past several years, albeit with some notable variation along the way. In addition, from the perspective of the model, the unemployment rate declined a bit faster over the past two years than was consistent with the other indicators. |
| Keywords: | LMCI; U.S.labor market; dynamic factor model; unemployment rate; employment |
| JEL: | E24 E66 J20 J6 |
| Date: | 2015–01–06 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:1438&r=lab |
| By: | Mendolia, Silvia (University of Wollongong); Walker, Ian (Lancaster University) |
| Abstract: | This paper investigates the relationship between personality traits in adolescence and education and labour market choices. In particular, we investigate the impact of grit (a tendency and ability to sustain interest in long term goals - perseverance) on the risk of youths being NEET – "Not in Education, Employment or Training". Thus, our focus is on early drop-out from the labour market and education at age 18-20. Individuals with high levels of grit are less likely to be out of education or employment, while low self-esteem and external locus of control increase the chances of experiencing these conditions. We use propensity score matching to control for a rich set of adolescent and family characteristics and our results show that personality traits do affect education and employment choices. We test the robustness of our results using the methodology proposed by Altonji et al. (2005) that consists of making hypotheses about the correlation between the unobservables and observables that determine the outcomes and the unobservables that influence personality. |
| Keywords: | personality, NEET, grit, locus of control, self-esteem |
| JEL: | I10 I21 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8740&r=lab |
| By: | Vincenzo Carrieri (CELPE and University of Salerno, Italy); Vito Peragine (University of Bari, Italy) |
| Abstract: | We propose an empirical model to estimate inequality of opportunity (IOp) among workers and to distinguish two different sources of inequality: (i) inequality in the labour attachment and (ii) inequality in the remuneration of each working hour. Considering working hours as a measure of effort, our model can also be conceived as an attempt of disentangling the direct from the indirect contribution of circumstances to IOp. We estimate a system of seemingly unrelated regression equations and we use an original identification strategy based on a local market condition variable acting as exclusion restriction. By using data from the 2011 wave of the EU-SILC data base, we find in general a strong positive direct effect and a negative indirect effect of circumstances on overall IOp. Moreover, we are able to identify three cluster of countries: a first cluster includes continental countries (Italy, Spain, France) and Sweden, which show a low degree of IOp. A second cluster shows "moderate" levels of IOp and includes Finland and United Kingdom. A third cluster of countries show the highest levels of IOp and includes all eastern countries. |
| Keywords: | inequality of opportunity, income inequality, labour attachment |
| JEL: | D61 D63 J62 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:ipu:wpaper:15&r=lab |
| By: | Artuc, Erhan (World Bank); Docquier, Frédéric (Université catholique de Louvain); Ozden, Caglar (World Bank); Parsons, Christopher (University of Oxford) |
| Abstract: | Discussions of high-skilled mobility typically evoke migration patterns from poorer to wealthier countries, which ignore movements to and between developing countries. This paper presents, for the first time, a global overview of human capital mobility through bilateral migration stocks by gender and education in 1990 and 2000, and calculation of nuanced brain drain indicators. Building on newly collated data, the paper uses a novel estimation procedure based on a pseudo-gravity model, then identifies key determinants of international migration, and subsequently uses estimated parameters to impute missing data. Non-OECD destinations account for one-third of skilled-migration, while OECD destinations are declining in relative importance. |
| Keywords: | international migration, labor mobility, brain drain, migration data, population censuses |
| JEL: | F22 J61 O15 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8746&r=lab |
| By: | Robin L. Lumsdaine; Stephanie J.C. Vermeer |
| Abstract: | This paper considers the potential relationship between providing care for grandchildren and retirement, among women nearing retirement age. Using 47,400 person-wave observations from the Health and Retirement Study (HRS), we find the arrival of a new grandchild is associated with a more than eight percent increase in the retirement hazard despite little overall evidence of a care/retirement interaction. We document that while family characteristics seem to be the most important factors driving the care decision, they are also important determinants of retirement. In contrast, while financial incentives such as pensions and retiree health insurance have the largest influence on retirement, the opportunity cost associated with outside income seems to have little effect on whether or not a grandmother provides care. There is little evidence of substitution between caring for grandchildren versus providing care for elderly parents or engaging in volunteer activities; grandchild care is instead taken on as an additional responsibility. Our findings suggest that policies aimed at prolonging worklife may need to consider grandchild care responsibilities as a countervailing factor while those policies focused on grandchild care may also affect elderly labor force composition. |
| JEL: | J12 J13 J14 J22 J26 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20756&r=lab |
| By: | Wei Jiang |
| Abstract: | Using a Mortensen-Pissarides search-and-matching framework, this paper investigates the importance of search frictions in determining the welfare and distributional effects of tax reforms that re-allocate the tax burden from capital to labour income. Calibrating the model to the UK economy, we find that the tax reforms are Pareto improving but increase inequality in the long run, despite welfare losses for at least one segment of the population in the short run. The results are robust to the variations in the relative bargaining power of workers and different specifications of unemployment benefit. But the welfare gains are higher for all agents if the relative bargaining power of workers is reduced or we assume that unemployment benefit depends on past wages. |
| Keywords: | search frictions; agent heterogeneity; unemployment benefits; tax reforms |
| JEL: | E21 E24 E62 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:ukc:ukcedp:1414&r=lab |
| By: | Leyla Mocan (Federal Reserve Board of Governors) |
| Abstract: | In 1997 Turkey passed a law making middle school completion compulsory, increasing the mandatory education from 5 to 8 years. At the time of this policy change, only 3-in-5 students were completing middle school in Turkey. In this paper, I employ data from the 2011 and 2012 Turkish Household Labor Force Survey to investigate the effect of this law on educational attainment, the impact of the increase in education on wages, and to explore how this varied across individuals. The results indicate that the fraction of children completing middle school increased more than 20 percentage points as a result of this reform. The effects were especially pronounced for girls (particularly those living in rural areas): I estimate that as a result of the reform, an additional half a million girls attained a middle school diploma. There are also considerable spillover effects into high school completion rates. Despite the large policy-induced increase in educational attainment, I find little evidence of a corresponding increase in labor force participation or full-time work. The results suggest large wage gains of about 14 percent per year of schooling, with these benefits concentrated among females. Taken together, the findings demonstrate that the policy change induced a dramatic change in educational attainment among the youth of this predominantly Muslim developing country, but that the economic benefits of the change were limited to women. |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:koc:wpaper:1424&r=lab |
| By: | Böckerman, Petri; Kanninen, Ohto; Suoniemi, Ilpo |
| Abstract: | We examine the effect of the replacement rule of a social insurance system on sickness absence. The elasticity of absence with respect to the benefit level is a critical parameter in defining the optimal sickness insurance scheme. A pre-determined, piecewise linear policy rule in which the replacement rate is determined by past earnings allows identification of the causal effect using a regression kink design. Using a large administrative dataset, we find a substantial and robust behavioral response. The statistically significant point estimate of the elasticity of the duration of sickness absence with respect to the replacement rate in a social insurance system is on the order of 1. |
| Keywords: | Sick pay, labor supply, sickness absence, regression kink design, social insurance |
| JEL: | I18 I3 J22 |
| Date: | 2014–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:61010&r=lab |
| By: | De Paola, Maria (University of Calabria); Gioia, Francesca (University of Edinburgh) |
| Abstract: | We investigate whether and how time pressure affects performance. We conducted a field experiment in which students from an Italian University are proposed to choose between two exam schemes: a standard scheme without time pressure and an alternative scheme consisting of two written intermediate tests, one of which to be taken under time pressure. Both exam schemes consist of a verbal and a numerical part, each carrying half of the total marks. Students deciding to sustain the alternative exam are randomly assigned to a "time pressure" and a "no time pressure" group. Students performing under time pressure at the first test perform in absence of time pressure at the second test and vice versa. We find that being exposed to time pressure exerts a negative and statistically significant impact on students' performance both at the verbal and at the numerical task. The effect is driven by a strong negative impact on females' performance, while there is no statistically significant effect on males. Gender differences in handling time pressure are relevant only when dealing with the verbal task. Using data on students' expectations, we also find that the effect produced by time pressure on performance was correctly perceived by students. Female students expect a lower grade when working under time pressure, while males do not. |
| Keywords: | time pressure, time constraints, gender differences, student performance |
| JEL: | C93 D03 I23 J71 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8708&r=lab |
| By: | Andrea Brandolini (Banca d'Italia); Francesca Carta (Banca d'Italia); Francesco D'Amuri (Banca d'Italia) |
| Abstract: | This paper contributes to the debate on the design of a centralised fiscal tool absorbing country-specific negative shocks in the euro area. Based on theoretical insights, it identifies the broad characteristics that a shock absorber based on unemployment should have in order to be incentive-compatible and politically feasible. It then derives empirically the combination of activation thresholds, experience rating, eligibility criteria, and benefit generosity which define the systems offering the highest stabilisation for given levels of redistribution, accounting for the large variation in benefit take-up rates across European countries. The analysis suggests that the shock absorber should: i) give rise to macro cross-national transfers, mimicking those that would be generated by a notional euro-wide unemployment benefit scheme of minimal coverage and generosity; ii) be activated by a trigger; and iii) feature partial experience rating. The simulation results, confirmed by robustness checks, show that even systems that do not redistribute resources between countries can have a considerable stabilisation impact in the medium run. Low benefit take-up in Southern Europe substantially reduces the stabilisation properties and the size of the scheme. |
| Keywords: | unemployment benefits, absorption of macroeconomic shocks, fiscal union. |
| JEL: | E6 J65 H53 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_254_14&r=lab |
| By: | Michela Braga (Bocconi University); Marco Paccagnella (OECD and Bank of Italy); Michele Pellizzari (University of Geneva) |
| Abstract: | This paper estimates the impact of university teachers on their students� academic achievement and labor market outcomes using administrative data from Bocconi University matched with Italian tax records. The estimation exploits the random allocation of students to teachers in a fixed sequence of compulsory courses. We find that the academic and labor market returns of teachers are only mildly positively correlated and that the professors who are best at improving the academic achievement of their best students are not always also the ones who boost their students� earnings the most, especially for the least able students. |
| Keywords: | teacher quality, higher education |
| JEL: | I20 M55 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_981_14&r=lab |
| By: | Douglas L. Campbell (New Economic School (NES)) |
| Abstract: | This study uses new measures of real exchange rates to study the collapse of US manufacturing employment in the early 2000s in historical and international perspective. To identify a causal impact of RER movements on manufacturing, I compare the US experience in the early 2000s to the 1980s, when large US fiscal deficits led to a sharp appreciation of the dollar, and to Canada’s experience in the mid-2000s, when high oil prices and a falling US dollar led to an equally sharp appreciation of the Canadian dollar. I use disaggregated sectoral data and a difference-in-difference methodology, finding that an appreciation in relative unit labor costs for the US lead to disproportionate declines in employment, output, investment, and productivity in relatively more open manufacturing sectors. In addition, I find that the impact of a temporary shock to real exchange rates is surprisingly long-lived. The appreciation of US relative unit labor costs can plausibly explain more than two-thirds of the decline in manufacturing employment in the early 2000s. |
| Keywords: | Exchange Rates, American Manufacturing, Hysteresis, Trade |
| JEL: | F10 F16 L60 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0212&r=lab |
| By: | Zwysen, Wouter |
| Abstract: | Using multilevel models on the German Socio-Economic Panel Study this paper shows that disadvantaged young adults (16-35 years old) are more affected by the business cycle than their similarly educated counterparts from more advantaged backgrounds. We propose that a disadvantaged background lowers desirability on the labour market, which matters more to employers as the labour market tightens. When the local unemployment rate is high, young adults from a disadvantaged background are less likely to be hired for good jobs or hired at all than their more advantaged counterparts. These results are robust to different operationalisations and sibling fixed effects. |
| Date: | 2014–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2014-43&r=lab |
| By: | Elva Bova; Christina Kolerus; Sampawende J.-A. Tapsoba |
| Abstract: | This paper examines the impact of fiscal policy on employment through the lenses of Okun’s Law. Looking at the panel of OECD countries over the past three decades, we find that fiscal policy can affect employment beyond the impact it is traditionally assumed to exert through the output multiplier. In particular, this impact is found to be effective for most items of current discretionary expenditure and for corporate income taxes and social security contributions. Okun’s Law is found to be stable under almost all model specifications, but higher spending on subsidies and lower social security contributions can amplify the impact of the output gap on employment gaps. |
| Keywords: | Fiscal policy;Tax rates;Labor markets;Employment;OECD;fiscal policy, labor market, employment gaps |
| Date: | 2014–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:14/216&r=lab |
| By: | Sebastian Gechert; Katja Rietzler; Silke Tober |
| Abstract: | The NAIRU is a key component of potential output and as such critically affects output gap estimates. In May 2014, the European Commission changed its specification of the NAIRU for several countries and lowered its NAIRU estimates – in the case of Spain from 26.6% to 20.7% for 2015. To test the dependence of the new NAIRU on unemployment versus structural factors, we run counterfactual simulations applying one-standard deviation shocks to actual unemployment and to the structural variable – real unit labor costs. We find that the NAIRU in its new specification is still largely determined by actual unemployment. This calls in question both the interpretation of potential output estimates as barriers to more vigorous inflation-stable economic activity and the accuracy of structural deficit figures. |
| Keywords: | NAIRU, Kalman filter, output gap, euro area, structural deficit |
| JEL: | E23 E24 E31 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:imk:wpaper:142-2014&r=lab |
| By: | Anderton, Robert; Aranki, Ted; Bonthuis, Boele; Jarvis, Valerie |
| Abstract: | This paper examines the usefulness of the Okun relationship as a “rule of thumb” for predicting changes in unemployment, as a result of changes in output. It argues that a disaggregated version of the Okun relationship – making use of the differential reaction of unemployment to changes in the various expenditure components of GDP - significantly enhances the capacity of the Okun relationship (in comparison to the aggregate “rule of thumb”) for predicting movements in unemployment. The paper tests this hypothesis using a dataset for the 17 euro area countries over the period 1996Q1-2013Q4. The results suggest that euro area unemployment is particularly sensitive to movements in the consumption component of GDP, while movements in foreign trade (exports and imports) have a much lower impact on unemployment developments. This reflects the highly labour-intensive nature of the services that represent the bulk of consumers’ expenditure, while the higher productivity manufacturing-related content of exports tends to be less labour intensive. JEL Classification: E2, E24, C23 |
| Keywords: | expenditure components of GDP, Okun relationship, panel econometrics, unemployment |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20141747&r=lab |
| By: | KODAMA Naomi; INUI Tomohiko |
| Abstract: | This study applies Davis, Haltiwanger, and Schuh's method (1996) to measure job creation/destruction rates of establishments in manufacturing firms using Japanese Economic Census data in 2006 and 2009. Results state that the net domestic employment decrease mainly arises from firms without subsidiary companies, overseas, and non-expanding multinational enterprises (MNEs). Domestic employment increases when the number of overseas subsidiaries increases. Both job creation/destruction rates of MNEs are high, and the globalization of Japanese firms accelerates de-industrialization in Japan. The job creation and the net employment growth rates of establishments belonging to small-sized firms are lower than those in large-sized firms. |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:15002&r=lab |