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on Labour Economics |
| By: | Lalé, Etienne (University of Bristol) |
| Abstract: | This paper provides a unified account of the trends in unemployment and labor force participation pertaining to the employment experience of older male workers during the past half-century. We build an equilibrium life-cycle model with labor-market frictions and an operative labor supply margin, wherein economic turbulence à la Ljungqvist and Sargent (1998) interact with institutions in ways that deteriorate employment. The model explains simultaneously: (i) the fall in labor force participation in the United States, (ii) the similar but more pronounced decline in Europe alongside rising unemployment rates and (iii) differences across European countries in the role played respectively by unemployment and labor force participation. The model also shows that policies that fostered early retirement may have exacerbated the deterioration of European labor markets: raising early retirement incentives to reduce unemployment among older workers tends to increase unemployment at younger ages, especially in turbulent economic times and under stringent employment protection legislation. |
| Keywords: | job search, job loss, turbulence, European unemployment, labor force participation |
| JEL: | E24 J21 J64 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | You, Jing; Wang, Shaoyang |
| Abstract: | We assess the unemployment duration-dependent impact of the 2008 Labor Contract Law on job finding probabilities and subsequently job-match quality, including job security, wages and employer-provided social insurance. Dynamic endogeneity underlying individuals’ sequential labor market outcomes is addressed by sharp regression discontinuity and correlated individual unobservables settling into non-parametric joint distribution. The law protracts employment only in the short-term. After job match, the law stabilizes employment and increases wages and insurance coverage, all in the short-term with substantial differences between urban locals and migrant workers and heterogeneity in gender. |
| Keywords: | unemployment, wage, social insurance, regression-discontinuity design, China |
| JEL: | C41 J64 J65 O53 |
| Date: | 2016–07–28 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Manes, Eran (Jerusalem College of Technology (JTC)); Schneider, Friedrich (University of Linz); Tchetchik, Anat (Ben Gurion University) |
| Abstract: | A large number of empirical studies pointed to the ongoing expansion of the shadow economy in many countries around the globe. A robust finding in these studies is the positive association between unemployment rates and the size of the unofficial sector. However, with consistent estimates of the size of the unofficial sector only available from the late 1980s, a lack of sufficient time span dictated the use of static models, allowing only a limited understanding of its temporal behavior and interdependence with other covariates. In this paper, we offer a first systematic attempt to estimate the dynamics of the shadow economy, using advanced dynamic panel techniques. Based on insights from a simple job search model of unemployment that features decreasing returns to unofficial activities and congestion effects in job searching, we conjecture a long-run equilibrium relationship between unemployment and the size of the shadow economy. Our empirical model lends strong support to this view. We find that in countries with less stringent job market regulation the long-run impact of Unemployment, the tax burden, and GDP on the shadow economy, while positive and significant, is much smaller than in heavily regulated countries Moreover, the speed of adjustment back to long-run equilibrium following temporary shocks is shown to be three times faster in countries with looser job-market regulation, compared with countries with stricter regulation. These findings have important policy implications. |
| Keywords: | shadow economy, boundaries to the shadow economy, unemployment, taxation, regulation |
| JEL: | C32 H11 H26 I2 O17 P16 P48 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Adamopoulou, Effrosyni (Efi) (Bank of Italy); Kaya, Ezgi (Cardiff University) |
| Abstract: | This paper studies the impact of peer behavior on living arrangements of young adults in the U.S. Using data from the National Longitudinal Study of Adolescent Health (Add Health) we analyze the influence of high school friends on the nest-leaving decision of young adults. We achieve identification by exploiting the differences in the timing of leaving the parental home among peers, the individual-specific nature of the peer groups that are based on friendship nominations, and by including school (network) and grade (cohort) fixed effects. Our results indicate that there are statistically significant peer effects on the decision of young adults to leave parental home. This is true even after we control for labor and housing market conditions and for a comprehensive list of individual and family-of-origin characteristics that are usually unobserved by the econometrician. We discuss various mechanisms and we confirm the robustness of our results through a placebo exercise. Our findings reconcile with the increasing fraction of young adults living with their parents that is persisting in the U.S. even after the end of the Great Recession. |
| Keywords: | peer effects, friends, living arrangements, leaving parental home |
| JEL: | D10 J12 J60 Z13 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Hetschko, Clemens; Schöb, Ronnie; Wolf, Tobias |
| Abstract: | Using specific panel data of German welfare benefit recipients, we investigate the non-pecuniary life satisfaction effects of in-work benefits. Our empirical strategy combines difference-in-difference designs with synthetic control groups to analyze transitions of workers between unemployment, regular employment and employment accompanied by welfare receipt. Working makes people generally better off than being unemployed, but employed welfare recipients do not reach the life satisfaction level of regular employees. This implies that welfare receipt entails non-compliance with the norm to make one´s own living. Our findings allow us to draw cautious conclusions on employment subsidies paid as welfare benefits. |
| Keywords: | life satisfaction,subsidized employment,unemployment,income support,in-work benefits,social norms |
| JEL: | I31 I38 J60 J68 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Fernando Rios-Avila; Gustavo Canavire-Bacarreza |
| Abstract: | Although one would expect the unemployed to be the population most likely affected by immigration, most of the studies have concentrated on investigating the effects immigration has on the employed population. Little is known of the effects of immigration on labor market transitions out of unemployment. Using the basic monthly Current Population Survey from 2001–13 we match data for individuals who were interviewed in two consecutive months and identify workers who transition out of unemployment. We employ a multinomial model to examine the effects of immigration on the transition out of unemployment, using state-level immigration statistics. The results suggest that immigration does not affect the probabilities of native-born workers finding a job. Instead, we find that immigration is associated with smaller probabilities of remaining unemployed, but it is also associated with higher probabilities of workers leaving the labor force. This effect impacts mostly young and less educated people. |
| Keywords: | Immigration; Unemployment Duration; Labor Force Transition |
| JEL: | J1 J6 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Glatt, Jordan; Wunnava, Phanindra V. (Middlebury College) |
| Abstract: | The scarring effect is defined as an increase in the probability of future unemployment spells and the reduction of subsequent wages as the result of joblessness early in one's working years. Many youths get into a rut at the beginning of their professional careers when they become unemployed, hindering future individual prospects and producing negative consequences for the economy as a whole. Because there is considerable evidence in the United States that early job displacement is followed by a higher risk of subsequent unemployment and lower trajectory for future earnings after re-entry, it is crucial to gain a better understanding of the economic factors that influence the youth unemployment rate in order to reduce the consequences on youths' future outlooks (Arulampalam, Gregg, and Gregory, 2001). This study not only demonstrates that the scarring effect is real but also allows for policy recommendations to be obtained from this analysis. |
| Keywords: | scarring, youth unemployment, unemployment spells, job displacement, earnings, re-entry, Great Recession |
| JEL: | J24 J31 J64 I21 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Belot, Michèle (University of Edinburgh); Kircher, Philipp (University of Edinburgh); Muller, Paul (University of Gothenburg) |
| Abstract: | We develop and evaluate experimentally a novel tool that redesigns the job search process by providing tailored advice at low cost. We invited job seekers to our computer facilities for 12 consecutive weekly sessions to search for real jobs on our web interface. For half, instead of relying on their own search criteria, we use readily available labor market data to display relevant alternative occupations and associated jobs. This significantly broadens the set of jobs they consider and significantly increases their job interviews. Effects are strongest for participants who otherwise search narrowly and have been unemployed for a few months. |
| Keywords: | online job search, occupational broadness, search design |
| JEL: | D83 J62 C93 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Ding, Sai (Chinese Academy of Social Sciences); Dong, Xiao-Yuan (University of Winnipeg, Manitoba); Maurer-Fazio, Margaret (Bates College) |
| Abstract: | In this paper we explore the intersectionality of religious and ethnic norms and gender relations across the domestic and public spheres of work in post-reform rural, minority-concentrated China. We focus on the role that children play in their parents' off-farm work decisions for three aggregated ethnic groups (majority Han, Muslim minorities, and non- Muslim minorities). We control for households' composition and economic characteristics and individuals' human capital and as well as local economic conditions. Children generally decrease women's willingness to work away from/outside the home and increase men's willingness to do so. When we focus specifically on the effects of pre-school children, our results suggest it is more socially acceptable for non-Muslim than Muslim women to work away from home. When we turn our attention to school-age children, the gender of the child becomes as important to the analysis as the gender of the parent. With regard to household composition, we find that in Muslim households the presence of extra adult men (of any age between 15 and 70) in the household reduces the likelihood that women engage in off-farm work. The presence in the household of a woman of grandmotherly age (between 46 and 70) supports Muslim minority women's ability to migrate for work. For non-Muslim households, grandfathers and grandmothers alike, facilitate the ability of parents (male and female) to migrate for work. |
| Keywords: | off-farm work, ethnicity, household composition, children, migration, China |
| JEL: | J14 J15 J16 J26 D13 O53 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Anderson, D. Mark (Montana State University); Brown, Ryan (University of Colorado Denver); Charles, Kerwin Kofi (Harris School, University of Chicago); Rees, Daniel I. (University of Colorado Denver) |
| Abstract: | Occupational licensing is intended to protect consumers. Whether it does so is an important, but unanswered, question. Exploiting variation across states and municipalities in the timing and details of midwifery laws introduced during the period 1900-1940, and using a rich data set that we assembled from primary sources, we find that requiring midwives to be licensed reduced maternal mortality by 6 to 7 percent. In addition, we find that requiring midwives to be licensed may have had led to modest reductions in nonwhite infant mortality and mortality among children under the age of 2 from diarrhea. These estimates provide the first econometric evidence of which we are aware on the relationship between licensure and consumer safety, and are directly relevant to ongoing policy debates both in the United States and in the developing world surrounding the merits of licensing midwives. |
| Keywords: | occupational licensing, midwives, maternal mortality, infant mortality |
| JEL: | J08 I18 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Avram, Silvia (University of Essex); Brewer, Mike (ISER, University of Essex); Salvatori, Andrea (ISER, University of Essex) |
| Abstract: | Increasing the labour market participation of single parents, whether to boost incomes or reduce welfare spending, is a major policy objectives in a number of countries. This paper presents causal evidence on the impact of work search requirements on single parents' transitions into work and onto other benefits. We use rich administrative data on all single parent welfare recipients, and apply a difference-in-differences approach that exploits the staggered roll-out of a reform in the UK that gradually decreased the age of the youngest child at which single parents lose the right to an unconditional cash benefit. Consistent with the predictions of a simple search model, the work search requirements have heterogeneous impacts, leading some single parents to move into work (especially those with strong previous labour market attachments), but leading some (especially those with weak previous labour market attachments) to move onto disability benefits (with no search conditionalities) or non-claimant unemployment. |
| Keywords: | single parents, active labour market policy, work search conditionalities |
| JEL: | H53 I38 J64 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Clarke, Damian (Universidad de Santiago de Chile); Oreffice, Sonia (University of Surrey); Quintana-Domeque, Climent (University of Oxford) |
| Abstract: | We study the determinants of season of birth of the first child, for white married women aged 25-45 in the US, using birth certificate and Census data. We also analyze stated preferences for season of birth using our own Amazon Mechanical Turk survey. The prevalence of quarters 2 and 3 is significantly related to mother's age, education, and smoking status during pregnancy. Moreover, those who did not use assisted reproductive technology present a higher prevalence of these births. The frequency of April to September births is also higher and more strongly related to mother's age in states where cold weather is more severe, and varies with mother's occupation, exhibiting a particularly strong positive association with working in "education, training, and library" occupations. Remarkably, this relationship between season and weather disappears for mothers in "education, training, and library" occupations, revealing that season of birth is a matter of choice and preferences, not simply a biological mechanism. We find that the average willingness to pay for season of birth of mothers who report to have chosen season of birth is 19% of financial wealth while for those who report not to have chosen it is only 2% and not statistically different from zero, with the former always targeting an April to September birth. In addition, the average willingness to pay for season of birth is higher among individuals, and parents, in "education, training, and library" occupations. We also document that the top-3 reasons for choosing season of birth are mother's wellbeing, child's wellbeing, and job requirements, while those in "education, training, and library" occupations rank job requirements as the most important reason. Finally, we present evidence that babies born between April and September have on average better health at birth even conditional on the observable maternal characteristics which predict selection. |
| Keywords: | quarter of birth, fertility timing, pregnancy, first birth, teachers, birth outcomes, willingness to pay, NVSS, ACS, Amazon Mechanical Turk |
| JEL: | I10 J01 J13 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Seah, Kelvin (National University of Singapore) |
| Abstract: | This study examines how exposure to immigrant students affects the academic achievement of native students in the three largest immigrant-receiving countries – United States, Australia, and Canada. Using a large cross-country dataset, variation in the share of immigrant children between different grade levels within schools is exploited to identify the impact of immigrant peers. I find that exposure to immigrant children has dissimilar effects on native students' achievements across the three countries. While exposure has a positive impact on Australian natives, it has a negative impact on Canadian natives. Exposure has no effect on U.S. natives. More importantly, I find that institutional factors, such as the way in which countries organise their educational systems, have a crucial bearing on how immigrant students affect their peers. |
| Keywords: | academic achievement, immigrant children, peer effects, within-school estimation |
| JEL: | I21 J15 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Meierrieks, Daniel; Renner, Laura |
| Abstract: | This contribution investigates the relationship between economic freedom and international migration. We argue that higher levels of economic freedom in the source countries of migration may discourage migration by generating more economic security, providing more economic opportunities and stimulating overall economic activity. Using a panel dataset on migration from 91 developing and emerging to the 20 most attractive OECD destination countries for the 1980-2010 period, we find that more economic freedom at home discourages high-skilled migration but does not matter to low-skilled migration. The negative association between economic freedom and high-skilled emigration also holds when we estimate (dynamic) panel models that allow for endogeneity in the economic freedom-migration nexus. Our findings suggest that high-skilled individuals are especially responsive to the economic incentives arising from economic freedom. This is especially true for those components of economic freedom associated with the provision of economic security in the form of wellprotected property rights, sound money and limited government involvement in the economic life. |
| Keywords: | economic freedom,international migration,low-skilled and high-skilled migration |
| JEL: | F22 J61 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Eder, Christoph (University of Innsbruck); Halla, Martin (University of Innsbruck) |
| Abstract: | As a consequence of World War II, Austria was divided into four different occupation zones for 10 years. Before tight travel restrictions came into place, about 11 percent of the population residing in the Soviet zone moved across the demarcation line. We exploit this large internal migration shock to further our understanding of why economic activity is distributed unevenly across space. Our analysis shows that the distorted population distribution across locations has fully persisted until today (60 years after the demarcation line become obsolete). An analysis of more direct measures of economic activity shows an even higher concentration in the former non-Soviet zone. This gap in economic activity is growing over time, mainly due to commuting streams out of the former Soviet zone. This shows that a transitory shock is capable of shifting an economy to a new spatial equilibrium, which provides strong evidence for the importance of increasing returns to scale in explaining the spatial distribution of economic activity. |
| Keywords: | spatial equilibrium, agglomeration effects, population shock, World War II, Austria |
| JEL: | R11 R12 R23 J61 N44 N94 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Bingley, Paul (Danish National Centre for Social Research (SFI)); Cappellari, Lorenzo (Università Cattolica del Sacro Cuore); Tatsiramos, Konstantinos (University of Nottingham) |
| Abstract: | This paper studies the influence of family, schools and neighborhoods on life-cycle earnings inequality. We develop an earnings dynamics model linking brothers, schoolmates and teenage parish neighbors using population register data for Denmark. We exploit differences in the timing of family mobility and the partial overlap of schools and neighborhoods to separately identify sorting from community and family effects. We find that family is far more important than community in influencing earnings inequality over the life cycle. Neighborhoods and schools influence earnings only early in the working life and this influence falls rapidly and becomes negligible after age 30. |
| Keywords: | sibling correlations, neighborhoods, schools, life-cycle earnings, inequality |
| JEL: | D31 J62 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Ost, Ben (University of Illinois at Chicago); Pan, Weixiang (University of Illinois at Chicago); Webber, Douglas A. (Temple University) |
| Abstract: | Analyzing how working students weather personal economic shocks is increasingly important as the fraction of college students working substantial hours has increased dramatically over the past few decades. Using administrative data on Ohio college students linked to matched firm-worker data on earnings, we examine how layoff affects the educational outcomes of working college students. Theoretically, layoff decreases the opportunity cost of college enrollment, but it could also make financing one's education more difficult, so the net effect is ambiguous. We find that layoff leads to a considerable reduction in the probability of employment while in school, but it has little impact on enrollment decisions at the extensive margin. On the intensive margin, we find that layoff leads to an increase in enrolled credits, consistent with the fact that the opportunity cost of college has decreased. |
| Keywords: | layoff, educational investment, working students |
| JEL: | I21 I23 J63 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Picchio, Matteo (Tilburg University, Center For Economic Research); van Ours, Jan (Tilburg University, Center For Economic Research) |
| Abstract: | From the point of view of workplace safety, it is important to know whether having a temporary job has an effect on the severity of workplace accidents. We present an empirical analysis on the severity of workplace accidents by type of contract. Method: We used micro data collected by the Italian national institute managing the mandatory insurance against work related accidents. We estimated linear models for a measure of the severity of the workplace accident. We controlled for time-invariant fixed effects at worker and firm levels to disentangle the impact of the type of contract from the spurious one induced by unobservables at worker and firm levels. Results: Workers with a temporary contract, if subject to a workplace accident, were more likely to be confronted with severe injuries than permanent workers. When correcting the statistical analysis for injury underreporting of temporary workers, we found that most of, but not all, the effect is driven by the under-reporting bias. Conclusions: The effect of temporary contracts on the injury severity survived the inclusion of worker and firm fixed effects and the correction for temporary workers’ injury under-reporting. This however does not exclude the possibility that, within firms, the nature of the work may vary between different categories of workers. For example, temporary workers might be more likely to be assigned by the employer dangerous tasks because they might have less bargaining power. Practical implications: The findings will be of help in designing public policy effective in increasing temporary workers’ safety at work and limiting their injury under-reporting. |
| Keywords: | workplace accidents; injury severity; temporary jobs; contract type; injury under reporting |
| JEL: | J81 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Krueger, Dirk; Mitman, Kurt; Perri, Fabrizio |
| Abstract: | How big are the welfare losses from severe economic downturns, such as the U.S. Great Recession? How are those losses distributed across the population? In this paper we answer these questions using a canonical business cycle model featuring household income and wealth heterogeneity that matches micro data from the Panel Study of Income Dynamics (PSID). We document how these losses are distributed across households and how they are affected by social insurance policies. We find that the welfare cost of losing one's job in a severe recession ranges from 2% of lifetime consumption for the wealthiest households to 5% for low-wealth households. The cost increases to approximately 8% for low-wealth households if unemployment insurance benefits are cut from 50% to 10%. The fact that welfare losses fall with wealth, and that in our model (as in the data) a large fraction of households has very low wealth, implies that the impact of a severe recession, once aggregated across all households, is very significant (2.2% of lifetime consumption). We finally show that a more generous unemployment insurance system unequivocally helps low-wealth job losers, but hurts households that keep their job, even in a version of the model in which output is partly demand determined, and therefore unemployment insurance stabilizes aggregate demand and output. |
| Keywords: | great recession; Social Insurance; Wealth Inequality |
| JEL: | E21 E32 J65 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=&r=lab |
| By: | Rapoport, Hillel (Paris School of Economics) |
| Abstract: | This paper reviews a growing literature on migration and globalization, focusing on its relevance for developing and emerging economies. It documents the role of diaspora networks in enhancing cross-border flows of goods, capital, and knowledge, eventually contributing to efficient specialization, investment, and productivity growth in the migrants' home-countries. Particular attention is paid to the role of skilled migrants, and to information imperfections reduction as the main channel for the documented effects. Overall, the evidence suggests that migrants contribute to the integration of their home-countries into the global economy. |
| Keywords: | migration, globalization, trade, FDI, financial flows, knowledge diffusion, development |
| JEL: | F21 F22 F63 J61 O11 O15 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=&r=lab |