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on Labour Economics |
| By: | Neumeier, Christian (University of Konstanz); Sorensen, Todd A. (University of Nevada, Reno); Webber, Douglas A. (Temple University) |
| Abstract: | The explicit costs of raising a child have grown over the past several decades. Less well understood are the implicit costs of having a child, and how they have changed over time. In this paper we use longitudinal administrative data from over 70,000 individuals in the Synthetic SIPP Beta to examine the earnings gap between mothers and non-mothers over the lifecycle and between cohorts. We observe women who never have children beginning to out earn women who will have children during their 20s. Gaps increase monotonically over the lifecycle, and decrease monotonically between cohorts from age 26 onwards. In our oldest cohort, lifetime gaps approach $350,000 by age 62. Cumulative labor market experience profiles show similar patterns, with experience gaps between mothers and non-mothers generally increasing over the lifecycle and decreasing between cohorts. We decompose this cumulative gap in earnings (up to age 43) into portions attributable to time spent out of the labor force, differing levels of education, years of marriage and a number of demographic controls. We find that this gap between mothers and non-mothers declines from around $220,000 for women born in the late 1940s to around $160,000 for women born in the late 1960s. Over 80% of the change in this gap can be explained by variables in our model, with changes in labor force participation by far the best explanation for the declining gap. Comparing our oldest cohort as they approach retirement to the projected lifecycle behavior of the 1965 cohort, we find that the earnings gap is estimated to drop from $350,000 (observed) to $282,000 (expected) and that the experience gap drops from 3.7 to 2.1 years. We also explore the intensive margin costs of having a child. A decomposition of earnings gaps between mothers of one child and mothers of two children also controls for age at first birth. Here, we find a decline in the gap from around $78,000 for our oldest cohorts to around $37,000 for our youngest cohorts. Our model explains a smaller share of the intensive margin decline. Changes in absences from the labor market again explain a large amount of the decline, while differences in age at first birth widen the gap. |
| Keywords: | family gap, opportunity cost of children, gender pay gap |
| JEL: | J11 J13 J16 J17 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10558&r=lab |
| By: | Addison, John T. (University of South Carolina); Teixeira, Paulino (University of Coimbra) |
| Abstract: | This paper investigates the determinants of industrial conflict in companies, using a multi-country workplace inquiry for 2009 and 2013 and various measures of strike activity. The principal goal is to address the effect of formal workplace representation on strikes, distinguishing in the first instance between works councils on the one hand and broadly equivalent trade union based entities on the other. The role of unionism is also central to this inquiry, not only with respect to the degree to which workplace representation is union dominated but also and more familiarly perhaps through workplace union density and the level at which collective bargaining is conducted. Attention is also paid to the quality of industrial relations, as reflected in dissonance, namely divergent assessments of managers and employee workplace representatives as to the state of industrial relations. Although country effects do matter, it is reported that works councils are associated with reduced strike activity. However, any such effect is sensitive in particular to the union status of work councilors and time. There is also some indication that collective bargaining at levels higher than the company can exacerbate strike activity but this effect does not persist, possibly because of decentralization and the development of hybrid bargaining structures. For its part, good industrial relations appears key to strike reduction, independent of workplace representation. |
| Keywords: | works councils, employee representation, union density, collective bargaining, industrial relations quality, strikes, trust |
| JEL: | J51 J52 J53 J83 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10575&r=lab |
| By: | Aaronson, Daniel (Federal Reserve Bank of Chicago); Dehejia, Rajeev (New York University); Jordan, Andrew (University of Chicago); Pop-Eleches, Cristian (Columbia University); Samii, Cyrus (New York University); Schulze, Karl (Federal Reserve Bank of Chicago) |
| Abstract: | This paper documents the evolving impact of childbearing on the work activity of mothers between 1787 and 2014. It is based on a compiled data set of 429 censuses and surveys, representing 101 countries and 46.9 million mothers, using the International and U.S. IPUMS, the North Atlantic Population Project, and the Demographic and Health Surveys. Using twin births (Rosenzweig and Wolpin 1980) and same gendered children (Angrist and Evans 1998) as instrumental variables, we show three main findings: (1) the effect of fertility on labor supply is small and often indistinguishable from zero at low levels of income and large and negative at higher levels of income; (2) these effects are remarkably consistent both across time looking at the historical time series of currently developed countries and at a contemporary cross section of developing countries; and (3) the results are robust to other instrument variation, different demographic and educational groups, rescaling to account for changes in the base level of labor force participation, and a variety of specification and data decisions. We show that the negative gradient in female labor supply is consistent with a standard labor-leisure model augmented to include a taste for children. In particular, our results appear to be driven by a declining substitution effect to increasing wages that arises from changes in the sectoral and occupational structure of female jobs into formal non-agricultural wage employment as countries develop. |
| Keywords: | labor supply, fertilty, mothers |
| JEL: | F63 F66 J00 J13 N00 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10559&r=lab |
| By: | Black, Sandra E. (University of Texas at Austin); Grönqvist, Erik (IFAU); Öckert, Björn (IFAU) |
| Abstract: | We study the effect of birth order on personality traits among men using population data on enlistment records and occupations for Sweden. We find that earlier born men are more emotionally stable, persistent, socially outgoing, willing to assume responsibility, and able to take initiative than later-borns. In addition, we find that birth order affects occupational sorting; first-born children are more likely to be managers, while later-born children are more likely to be self-employed. We also find that earlier born children are more likely to be in occupations that require leadership ability, social ability and the Big Five personality traits. Finally, we find a significant role of sex composition within the family. Later-born boys suffer an additional penalty the larger the share of boys among the older siblings. When we investigate possible mechanisms, we find that the negative effects of birth order are driven by post-natal environmental factors. We also find evidence of lower parental human capital investments in later-born children. |
| Keywords: | birth order, personality, occupation choice |
| JEL: | J12 J24 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10560&r=lab |
| By: | Shoichi Sasaki (Graduate School of Economics, Kobe University) |
| Abstract: | This study examines the effects of inequalities in the lower, rather than the upper, tail of wage distribution due to a declining labor market on marriage behaviors based on gender in Japan. I apply a median-preserving spread to a marriage search model and then empirically analyze the theoretical hypothesis for cross-gender marriage behaviors using extensive individual Japanese data from the Employment Status Survey. The theoretical and empirical results show that gender wage inequalities in the lower and upper tails have positive and statistically significant effects on increasing the probability of unmarried people among both genders. On the other hand, an increase in male non-standard employment and unemployment rates have positive and significant effects on the probability of unmarried women, even after controlling with wage inequality indices. In addition, the median wage for women has a significant and negative effect on the probability of unmarried men. These results highlight the need for policies to promote a shift from male non-standard to standard employment and increased wages in the lower income class to raise marriage rates for both genders. |
| Keywords: | wage inequality, non-standard employment, marriage behavior, median-preserving spread, two-sided search |
| JEL: | J12 J31 D31 |
| URL: | http://d.repec.org/n?u=RePEc:koe:wpaper:1705&r=lab |
| By: | Anger, Silke (Institute for Employment Research (IAB), Nuremberg); Camehl, Georg (DIW Berlin); Peter, Frauke (DIW Berlin) |
| Abstract: | Economists consider personality traits to be stable, particularly throughout adulthood. However, evidence from psychological studies suggests that the stability assumption may not always be valid, as personality traits can respond to certain life events. Our paper analyzes whether and to what extent personality traits are malleable over a time span of eight years for a sample of working individuals. Furthermore, we specifically look at changes in personality traits after a major adverse life event: involuntary job loss. We use data from the German Socio-Economic Panel Study (SOEP) from 2004 to 2014 – a period over which individuals' Big Five personality inventory was measured three times. Our dataset allows us to exploit detailed employment information, particularly reasons for job termination and unemployment spells. We focus solely on plant closures as a reason for job termination. Job loss due to plant closure is widely used as a relatively exogenous event to identify causal effects. Our results suggest that personality traits are indeed malleable during adulthood. Although the Big Five measures are relatively stable within the overall population of workers, we find an increase in openness, that is, the willingness to seek new experiences, for the average displaced worker. This increase, however, is fully driven by individuals with high educational attainment and by those who find a new job immediately after dismissal. The other dimensions of the Big Five personality inventory remain nearly unchanged after an involuntary job loss. Our findings hold for a number of robustness checks and are supported by the results of a falsification test using a placebo treatment. |
| Keywords: | involuntary job loss, personality traits, matching |
| JEL: | I12 I18 K32 C33 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10561&r=lab |
| By: | Paul Gregg (Department of Social & Policy Sciences, University of Bath); John Jerrim (Department of Social Science, UCL Institute of Education, University College London); Lindsey Macmillan (Department of Social Science, UCL Institute of Education, University College London); Nikki Shure (Department of Social Science, UCL Institute of Education and Institute of Labor Economics) |
| Abstract: | The proportion of children living in a jobless household is a key indicator of social exclusion across Europe. Yet there is little existing evidence on the extent to which this measure of childhood deprivation is associated with later life outcomes. We use two harmonised cross-national data sources, the European Survey of Income and Living Conditions (EU-SILC) from 2011 and the Programme for International Student Attainment (PISA) from 2012, to address this question. We consider the association between children experiencing jobless households and three medium- and long-term outcomes: education, adult worklessness and adult poverty. We find evidence of large penalties to experiencing a jobless household in childhood across all three outcomes in some countries while in other countries there is no longer-term consequences of this indicator of social exclusion. Countries with high levels of children in jobless households such as the UK, Belgium and Ireland typically have more severe penalties for the medium- and longer-term outcomes of those children, although this varies by gender. This research suggests that this is a powerful measure of social exclusion, predicting severely limited life chances for the next generation. |
| Keywords: | PISA; Worklessness; Joblessness; Poverty; Intergenerational mobility; Education inequality |
| JEL: | J62 J64 I32 I24 |
| Date: | 2017–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:qss:dqsswp:1705&r=lab |
| By: | Bilson, Jessica R. (University of Western Australia); Jetter, Michael (University of Western Australia); Kristoffersen, Ingebjørg (University of Western Australia) |
| Abstract: | We investigate the effect of individual income on interpersonal trust levels, using longitudinal survey data for 22,219 Australians over the 2005-2014 period. Our results produce two key insights. First, we demonstrate the importance of accounting for individual-level fixed effects, as the income coefficient goes from positive and statistically significant in a pooled regression to negative and statistically significant in a fixed effects panel model. Second, this negative effect of income on trust holds only for men, and not for women. This result appears to be concentrated among males who are young and moving from no income to positive income, but employment status is not the driving factor. Further, we explore a potential channel via psychological characteristics and find evidence of men reporting greater levels of neuroticism and fretfulness following an increase in income but, again, women do not. In turn, neuroticism and fretfulness are robust predictors of decreased trust levels; these additional findings are based on cross-sectional variation only, since both these variables are available in only one of the survey waves to date. |
| Keywords: | gender differences, income levels and trust, interpersonal trust, neuroticism |
| JEL: | D01 D31 J16 Z10 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10585&r=lab |
| By: | Mellizo, Philip (College of Wooster); Carpenter, Jeffrey P. (Middlebury College); Matthews, Peter Hans (Middlebury College) |
| Abstract: | We use an experiment to evaluate the effects of participatory management on firm performance. Participants are randomly assigned roles as managers or workers in firms that generate output via real effort. To identify the causal effect of participation on effort, workers are exogenously assigned to one of two treatments: one in which the manager implements a compensation scheme unilaterally or another in which the manager cedes control over compensation to the workers who vote to implement a scheme. We find that output is between seven and twelve percentage points higher in participatory firms. |
| Keywords: | voice, control, intrinsic motivation, participatory management, real effort, experiment |
| JEL: | C92 J33 J53 J54 M50 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10576&r=lab |
| By: | Glewwe, Paul (University of Minnesota); Huang, Qiuqiong (University of Arkansas, Fayetteville); Park, Albert (Hong Kong University of Science & Technology) |
| Abstract: | Economists have long recognized the important role of formal schooling and cognitive skills on labor market participation and wages. More recently, increasing attention has turned to the role of personality traits, or noncognitive skills. This study is among the first to examine how both cognitive and noncognitive skills measured in childhood predict educational attainment and early labor market outcomes in a developing country setting. Analyzing longitudinal data on rural children from one of China's poorest provinces, we find that both cognitive and noncognitive skills, measured when children are 9-12, 13-16, and 17-21 years old, are important predictors of whether they remain in school or enter the work force at age 17-21. The predictive power of specific skill variables differ between boys and girls. Conditioning on years of schooling, there is no strong evidence that skills measured in childhood predict wages in the early years of labor market participation. |
| Keywords: | cognitive skills, noncognitive skills, school-to-work transition, schooling, rural China |
| JEL: | I25 J16 J24 O53 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10566&r=lab |
| By: | Tania Babina |
| Abstract: | Using US Census employer-employee matched data, I show that employer financial distress accelerates the exit of employees to found start-ups. This effect is particularly evident when distressed firms are less able to enforce contracts restricting employee mobility into competing firms. Entrepreneurs exiting financially distressed employers earn higher wages prior to the exit and after founding start-ups, compared to entrepreneurs exiting non-distressed firms. Consistent with distressed firms losing higher-quality workers, their start-ups have higher average employment and payroll growth. The results suggest that the social costs of distress might be lower than the private costs to financially distressed firms. |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:17-19&r=lab |
| By: | Shaimaa Yassin (Institute of Economic Research (IRENE), University of Neuchatel); Francois Langot (University of Le Mans (GAINS-TEPP)) |
| Abstract: | We propose in this paper a dynamic n-state transition model to correct for measurement error, that could arise for example from recall and/or design bias, in retrospective panels. Our model allows the correction of measurement errors, when very little auxiliary information is available, over a long period of time taking into consideration the conjuncture fluctuations. The technique suggested shows that it is sufficient to have population moments (for at least one point in time) to correct over- or under-reporting biases. Using a Simulated Method of Moments, one can estimate a transition- and time-specific correction matrix for the labor market flows in a biased retrospective panel. Using retrospective and contemporaneous data from Egypt, we estimate the model and show the significance and robustness of our correction. We show through a reform evaluation that neglecting measurement error in the data would have produced significantly different and misleading results. |
| Keywords: | Panel Data, Retrospective Recall, Measurement Error, Labor Markets, Transition Models. |
| JEL: | C83 C81 J01 J62 J64 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:irn:wpaper:17-04&r=lab |
| By: | Acharyya, Rajat; Kar, Saibal |
| Abstract: | This paper shows that trade and emigration of skilled workers from a poor country is complementary but that between trade and emigration of unskilled workers is a substitute. The asymmetric effect of more openness to trade on the local wages seems to be crucial in driving such results. The asymmetric changes in skilled and unskilled wages generate counterintuitive outcomes regardless of the policy shock that triggers such wage effect. One of the more compelling outcomes is rise in wage inequality as influenced by asymmetric emigration patterns. |
| Keywords: | Trade,emigration,skilled labour,specific factor,remittances,tax |
| JEL: | F22 J64 O15 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:4&r=lab |
| By: | De Fraja, Gianni; Lemos, Sara; Rockey, James |
| Abstract: | This paper finds that unemployment shocks affect young workers for the rest of their lives. This scar of youth unemployment is concentrated in the first few years after entry in the labour market: one month of unemployment at age 18-20 cause a permanent income loss of 2%. However, unemployment after that age has no long term effect. |
| Keywords: | Lifetime earnings; Scarring effect.; youth unemployment |
| JEL: | J31 J64 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11852&r=lab |
| By: | Beugnot, Julie (Université de Franche Comté); Fortin, Bernard (Université Laval); Lacroix, Guy (Université Laval); Villeval, Marie Claire (CNRS, GATE) |
| Abstract: | We investigate whether peer effects at work differ by gender and whether the gender difference in peer effects – if any – depends on work organization, precisely the structure of social networks. We develop a social network model with gender heterogeneity that we test by means of a real-effort laboratory experiment. We compare sequential networks in which information on peers flows exclusively downward (from peers to the worker) and simultaneous networks where it disseminates bi-directionally along an undirected line (from peers to the worker and from the worker to peers). We identify strong gender differences in peer effects, as males' effort increases with peers' performance in both types of network, whereas females behave conditionally. While they are influenced by peers in sequential networks, females disregard their peers' performance when information flows in both directions. We reject that the difference between networks is driven by having one's performance observed by others or by the presence of peers in the same session in simultaneous networks. We interpret the gender difference in terms of perception of a higher competitiveness of the environment in simultaneous than in sequential networks because of the bi-directional flow of information. |
| Keywords: | gender, peer effects, social networks, work effort, experiment |
| JEL: | C91 J16 J24 J31 M52 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10588&r=lab |
| By: | Ann Barbara Bauer; Reiner Eichenberger |
| Abstract: | The return on investments in human and social capital increases in their economic lifetime. Thus, personal, parental, and societal investments in the capacities of individuals take place when these persons are young. Interestingly, the complementary thesis has been widely neglected; investments in the productive capacities of older workers—by the employees themselves, their employers, and their co-workers—should be expected to depend on the time left before retirement. In this paper, we analyze how an increase in the statutory retirement age affects investments in the productivity of older workers. We compare pre- and post-pension reform cohorts and estimate the treatment effect on training participation, job involvement, support from colleagues, and leisure activities. Using a Swiss natural experiment, we find strong support for higher human and social capital investments and the reallocation of time from leisure to work. |
| Keywords: | Pension reform; natural experiment; old-age productivity; human capital; social capital; allocation of time |
| JEL: | H55 J14 J24 J26 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2017-02&r=lab |
| By: | Razin, Assaf |
| Abstract: | The exodus of Soviet Jews to Israel in the 1990s was a unique event. The extraordinary experience of Israel, which has received three quarter million migrants from the Former Soviet Union, amounting to 17 percent of its population, within a short time, is also relevant for the current debate about migration and globalization. The immigration wave was distinctive for its large high skilled cohort, and its quick integration into the domestic labor market. Immigration also changed the entire economic landscape: it raised productivity, underpinning technological prowess, and had significant impact on income inequality and the level of redistribution in Israel's welfare state. |
| JEL: | F22 F6 H00 J1 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11877&r=lab |
| By: | Damian Clarke (Universidad de Santiago de Chile); Sonia Oreffice (University of Surrey); Climent Quintana-Domeque (University of Oxford and St Edmund Hall) |
| Abstract: | A large body of evidence documents the educational and labor market returns to birth weight, which are reflected in investments in large social safety net programs targeting birth weight and early life health. However, there is no direct evidence on the private valuation of birth weight. In this paper we estimate the willingness to pay (WTP) for birth weight in the US. Using a series of discrete choice experiments, we find that individuals are, on average, willing to pay $1.44 for each additional gram of birth weight. This marginal WTP is particularly high at low birth weights, and turns negative at higher weights. The WTP among parents is higher than among non-parents, and particularly than those who do not plan to have children. Nonetheless, a series of calculations suggest that even the parental WTP for birth weight falls short of the inferred public WTP from large social safety net programs, and is lower than the expected present value of birth weight in the labor market for a US-born child. We present a parsimonious model which is able to explain the different WTP by parental status and the discrepancy between our estimated private valuation and the returns in the labor market: Parents may underestimate the value of birth weight, opening the door for new policy interventions to increase health at birth via informational campaigns. |
| Keywords: | discrete choice experiments, early life health, value of health, willingness to pay |
| JEL: | C90 I10 J13 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2017-018&r=lab |
| By: | David L. Dickinson; David Masclet; Emmanuel Peterle |
| Abstract: | In this paper, we examine labor market favoritism in a unique laboratory experiment design that can shed light on both the private benefits and spillover costs of employer favoritism (or discrimination). Group identity is induced on subjects such that each laboratory « society » consists of eight individuals each belonging to one of two different identity groups. In some treatments randomly assigned employer-subjects give preference rankings of potential worker-subjects who would make effort choices that impact employer payoffs. Though it is common knowledge that group identity in this environment provides no special productivity information and cannot facilitate communication or otherwise lower costs for the employer, employers preferentially rank in-group members. In such instances, the unemployed workers are aware that an intentional preference ranking resulted in their unemployment. Unemployed workers are allowed to destroy resources in a final stage of the game, which is a simple measure of the spillover effects of favoritism in our design. Though we find evidence that favoritism may privately benefit a firm in terms of higher worker effort, the spillover costs that result highlight a reason to combat favoritism/discrimination. This result also identifies one potential micro-foundation of societal unrest that may link back to labor market opportunity. Key Words: Discrimination, Experimental Economics, Social identity, Conflicts |
| JEL: | C90 C92 J15 J16 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:17-02&r=lab |
| By: | Muhammad Umar Boodoo |
| Abstract: | This paper studies the strategic interaction between employee stakeholders, in particular labor unions, and top management, and evaluates the effect of the two parties’ inherent competitive rent-seeking behavior on CEO pay. Using a panel of firms listed on the S&P/TSX composite index, this paper finds that CEO compensation withstood the financial crisis despite lower and even negative corporate performance. Further, heavily-unionized companies were associated with higher CEO pay in terms of non-equity elements such as salary and pension allocations. The presence of unions had no observed effect in reducing bonuses, stock options, and restricted stock units. These findings have implications for the debate on income inequality, and the power of unions to bring about change. |
| Keywords: | Executive labor market; Economic inequality; Executive pay; Labor union; Great Recession. |
| JEL: | J1 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:69601&r=lab |
| By: | Efraim Benmelech; Carola Frydman; Dimitris Papanikolaou |
| Abstract: | We provide new evidence that a disruption in credit supply played a quantitatively significant role in the unprecedented contraction of employment during the Great Depression. To analyze the role of financing frictions in firms' employment decisions, we use a novel, hand-collected dataset of large industrial firms. Our identification strategy exploits preexisting variation in the need to raise external funds at a time when public bond markets essentially froze. Local bank failures inhibited firms' ability to substitute public debt for private debt, which exacerbated financial constraints. We estimate a large and negative causal effect of financing frictions on firm employment. Interpreting the estimated elasticities through the lens of a simple structural model, we find that the lack of access to credit may have accounted for 10% to 33% of the aggregate decline in employment of large firms between 1928 and 1933. |
| JEL: | E24 E5 G01 G21 G31 J6 N42 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23216&r=lab |